CLAUSE 19.—(Treasury advances to Unemployment Fund.)

HC Deb 01 May 1934 vol 289 cc179-289

4.3 p.m.

The CHAIRMAN

The first two Amendments on the Order Paper in the names of the hon. Member for East Birkenhead (Mr. White) and two of his hon. Friends—in page 16, line 32, after "shall," to insert "in respect of one-third of the sum total of any such advance"; and, in line 42, to leave out "two million seven hundred and fifty," and to insert "nine hundred and fifteen"—are, I think, clearly out of order, as they impose a charge. With regard to the succeeding three Amendments in the name of the right hon. Member for Hill-head (Sir R. Horne) and others—in page 17, line 1, to leave out "seven hundred and fifty," and to insert "five hundred"; after "each," to insert until the expiry of the last of the periods for which rates of interest were fixed by the Treasury before the commencement of this Part of this Act, and thereafter of two million pounds each"; and, in line 24, to leave out "and one half"—I think that they can be regarded as one Amendment. As to the first two of those Amendments, I think that they are clearly in order, but with regard to the third I am not quite so certain. It is a difficult question to decide, because it depends on what would be, or might be, the result if the Bill were so amended, but at the moment I am inclined to think that the Amendment probably is in order. In those circumstances, I suggest that it would be for the convenience of the Committee, if the right hon. Gentleman so agrees, that the three Amendments could be discussed as one. In that case I must reserve my rights, and if facts are brought to my attention which may make me change my opinion with regard to the third Amendment, I shall have to deal with that accordingly.

Mr. LAWSON

If you are calling upon these Amendments, I take it that the discussion will be within the limits of the Amendments, and, therefore, there can be no general discussion until we reach the Question "That the Clause stand part of the Bill"?

The CHAIRMAN

It seems to me that the question which is raised by taking the three Amendments as one is a question which obviously needs arguments of some wide scope. I do not want to restrict unduly any discussion which may properly be said to bear upon what I take to be the avowed object of these Amendments, namely, to lighten the burden upon the Unemployment Fund. Therefore, I think that the discussion might be permitted to be a reasonably wide one, but it is quite possible that questions which should be raised on the Question of the Clause standing part, really could not be raised on these Amendments.

Mr. LAWSON

May I suggest to you, Sir Dennis, that the trouble in the Committee and the House during the whole discussions on this Bill, and particularly in reference to this Clause, has been that we could neither discuss it generally as a sort of Second Reading Debate on the Clause, nor were we quite sure of the limits? Therefore, I would suggest that the right hon. Gentleman's Amendments should be strictly limited to the words of the Amendments, and that the general discussion should be taken upon the Clause standing part. Otherwise, I am afraid that, with the best will in the world, we shall find ourselves in exactly the same position as previously.

The CHAIRMAN

The hon. Gentleman will pardon me for saying that there is a slight mistake in what he has said. I do not think that the Committee has had any experience at all of discussion of this Clause.

Mr. LAWSON

We had the Money Resolution.

The CHAIRMAN

Yes, the Money Resolution, but I think the hon. Gentleman's point only confirms what I said. Obviously, the Amendments in the name of the right hon. Gentleman raise a very important point. I do not want unduly to restrict discussion, but I gather from the hon. Member who speaks for the Opposition that the Opposition desire to have an opportunity of discussing the Question, "That the Clause stand part of the Bill." That being so, if we get that opportunity in the ordinary course, as far as time is available, I think that the Opposition can do as they wish so long as they do not go beyond what are the reasonable bounds of discussion in regard to the Amendment before the Committee, and can speak on the Amendments or on the Clause, or both.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I take it that your Ruling does not preclude the somewhat wider scope for the discussion of the Amendment which you contemplated when you first got up, and I take it that this offers one way of indicating the views of hon. and right hon. Members upon the burden which now lies upon the fund? It seems to me that it might be difficult both for them to make their case and for me to make any case that I wanted to make in reply, without going a little beyond the actual terms of the Amendment. I venture to suggest that that would not preclude discussion of what the Opposition desires to discuss upon the Motion, "That the Clause stand part of the Bill," even although it happens to be touched upon on the Amendment?

The CHAIRMAN

I think that the right hon. Gentleman has rightly interpreted what was in my mind. I said that I regarded this Amendment as one of such importance that I should not want unduly to restrict discussion upon it. In order to explain what I mean, perhaps I may put this point. There are certain Amendments which have been ruled out of order, and, obviously, there is a certain common object in the minds of hon. Members who put down those Amendments and in the minds of the right hon. Gentleman and his friends. Therefore, I had it in mind that it would not be possible to shut out from this discussion the general question of whether the burden upon the Unemployment Fund should or should not be lightened. The right hon. Gentleman said that, quite obviously, it leaves open certain points which the Opposition or any other hon. Members of the Committee may wish to raise on the Question, "That the Clause stand part of the Bill," and it may be that points which they would wish to raise could be raised equally well either on the Amendment or on the Question, "That the Clause stand part." I must leave it entirely to hon. Members to make their own choice as to whether they devote their remarks mainly to the Amendment or to the Question, "That the Clause stand part."

Captain CROOKSHANK

As you have indicated that you are going to call my right hon. Friend's Amendment next, may I ask what is happening to the Government's Amendments, because, although they do not appear on the Order Paper to-day, there are Amendments down to this Clause for the Report stage. It seems to me most extraordinary. Probably they are only drafting Amendments, but I should like some information.

The CHAIRMAN

It is beyond me to understand what the hon. and gallant Member is talking about. I know nothing of any Amendments to this Clause except those which are on the Order Paper.

Captain CROOKSHANK

I thought you would not understand because I myself did not understand, but this morning, on glancing through the Amendments which are down for the Report stage of the Bill, I found, on page 843, three Amendments to Clause 19 in the name of the Minister.

The CHAIRMAN

I understand now that the hon. and gallant Member is trying to deal with something which does not arise on the Committee stage of this Clause.

Captain CROOKSHANK

May I ask whether it is possible to put down Amendments to a Clause for the Report stage of a Bill when the Clause has not been disposed of in Committee, and whether, if the Amendments are to be discussed at all, they should not come on the Committee stage? The Minister ought to tell us whether they are drafting Amendments or Amendments of substance?

The CHAIRMAN

I should like to make clear to the hon. and gallant Member that that is not a point which can be raised now. There is nothing down with regard to any Government Amendments in the Committee stage. We are now in Committee, and the Committee is concerned only with the Committee stage. I cannot answer, and it would not be in order for the hon. and gallant Member to raise questions of that kind as to the Report stage.

Sir PERCY HARRIS

Is it in order to put Amendments on the Paper for the Report stage——

The CHAIRMAN

That is, obviously, not a point for the Chairman.

4.14 p.m.

Sir ROBERT HORNE

I beg to move, in page 17, line 1, to leave out "seven hundred and fifty," and to insert "five hundred."

I am very much obliged to you, Sir Dennis, for the indication you have made as to the kind of course this Debate may follow. I think that I shall have no difficulty before I sit down in making it plain, in my general argument, that the part of the Amendment to which you have referred as being doubtful does not, in reality, transgress any of the Rules of Order.

In moving the Amendment which stands in my own name and the names of several of my colleagues who represent all sections of the House which support His Majesty's Government, I may say that we are a few only of a very large number in this House who hold similar views with regard to the incidence of the debt upon the Unemployment Fund. In the course of the Budget Debate, we thought, and we still think, that it is inequitable to fix upon the insurance scheme and upon those insured persons who, if I may use the phrase, played the insurance game according to the rules, the whole burden of the debt, much of which, it is not contested, was due to attempts by various Governments not to apply insurance regulations but to succour people who had fallen out of insurance. We also thought and still think that inasmuch as the contributions to the Unemployment Fund were considerably raised in the time of the emergency of 1931 it would be appropriate that as soon as means were available that burden should at least be attempted to be mitigated for two reasons. First because these contributions were fixed with a figure of 3,000,000 unemployed in mind whereas the figure is now down nearer to 2,000,000 and secondly because the present rates are a serious charge upon industry. Moreover we thought then and still think that it was more important to devote the realised surplus of last year's Budget to the reduction of this debt where its influence would be both penetrating and powerful than to devote it to an exiguous reduction of the great mass of debt which the country has to bear where its effect has not nearly so much significance.

But, of course, we entirely realise that there are other opinions to the contrary. I know that these are genuinely and sincerely held and in particular they are held by the Chancellor of the Exchequer.

To-day so far as our major proposition is concerned we are entirely in his tender and gentle hands. The surplus of last year's Budget has disappeared. It has gone to the payment of debt. It can no longer be called back. It is dissipated in the fortunes of the country. It is true that you might by borrowing raise another sum to put in its place but the surplus has gone and so far as the present Bill is concerned you could only apply any money so borrowed for the purposes of this Bill if you brought in a new Financial Resolution and passed it through its Second Reading, Committee and Report stages and thereafter based a Clause of the Bill upon it. But in this connection there is one great factor that is clear to all of us. The only person who can borrow for such a purpose is the Chancellor of the Exchequer. Indeed he is the only person who can suggest borrowing for such a purpose. If anyone of us was to make a Motion our words would immediately be choked back in our throats by the action of the Chairman, because a private Member cannot make a Motion which involves a charge upon the revenue. Such a Motion can only come by a very laudable and useful arrangement in our financial system from the Government Bench. Are we in that situation entirely powerless to achieve anything at all to mitigate a situation which to some extent many of us deplore? I do not think we are entirely powerless. The problem can be tackled from a different aspect. We cannot achieve what we desire, we cannot achieve even anything big but we can, I think, achieve something : and it is towards obtaining that more moderate result that these Amendments are directed. The general idea of the Amendments is that we should attack this problem from the side of reducing the annual charges for sinking fund and interest on the Unemployment Fund.

I now beg the attention of the Committee to the Clauses of the Bill dealing with that matter in order that I may explain exactly what I desire to reach. It is provided in Clause 19 that there shall be paid towards the annual charges on the Unemployment Debt in each year two instalments. The Committee will find the relevant provisions at the top of page 17. Two instalments of £2,750,000 each are to be paid in each year and it is provided that nothing in the Clause shall be construed as preventing the application towards the discharge of debt of sums additional to these instalments and that the appropriate rate of interest to which reference has been made in a previous part of the Clause shall mean : as respects each advance, the rate of interest which has been fixed by the Treasury, before the commencement of this part of this Act, for the period for which it was fixed, and after that period the rate of three and one-half per cent. per annum. At this stage perhaps it is as well that I should make an explanation of the facts which I obtained in answer to a question that I put yesterday. This debt is to a considerable degree at present in the form of documents granted by the Treasury to the National Commissioners of debt and these operate only for five-year periods. I think the last date is approximately in 1938, and the average rate of interest upon the debt until these documents come to an end is 4⅝ths per cent. These arrangements have been made by the undertaking of contractual obligations. The National Debt Commissioners have borrowed the money which they lent to the Unemployment Fund from the Post Office and the Trustee Savings Banks upon definite terms as to the rate of interest to be paid. The Post Office and the Trustee Savings Banks in their turn have based the interest which they allow to their depositors upon the rates that they are to obtain from the Unemployment Fund. Although I should have liked to do something to get rid of this high rate of interest in the period immediately in front of us, I do not propose to make any such suggestion for two very good reasons. In the first place, my suggestions would be out of order, because it would undoubtedly involve an additional charge upon the revenue. The Consolidated Fund has guaranteed these payments of interest, and if you lessened the rate of interest you would be putting an additional charge on the Treasury. The second reason, which I regard as even more important, is that I would do nothing to weaken contractual obligations of that kind incurred to the Post Office and the Trustee Savings Banks. It is one of the very things that we fought the Election of 1931 to guard against. I think these are obligations to which the House must undoubtedly pay attention, and it must see that they are fully implemented. Accordingly, I cannot make any suggestion that the rate of interest can be completely dealt with until all these documents have completed their full run, but after that I suggest that the rate of interest upon the debt should not be 3½ but 3 per cent. That in no way involves creating a charge upon the revenue. The rate of interest that may be arranged now is one that must of course be acquiesced in by the National Debt Commissioners. If they choose to lend at 3 per cent., there is no extra charge involved of any kind. As the answer to my question yesterday disclosed the interest which the Unemployment Fund pays is paid directly to the National Commissioners of Debt. There is accordingly involved nothing at all that will bring upon the Treasury any increased charge, Of course there would be behind that—if any doubt still remained—the fact which is known to everybody that the Treasury may be able to borrow money at a reduced rate. If they chose to meet this debt by short-term borrowing, they would be able to borrow their money at very much less than 3 per cent. and make a profit. So that upon every ground it would be impossible to rule this Amendment out of order.

Why do I say that this rate of 3½ per cent. should be reduced? Even upon a much longer term debt than this is ever likely to be and indeed one that can only be redeemed at the option of the Government, to wit, the 3½ per cent. Conversion Loan, if you look at the quotations on the Stock Exchange you will find that the Government are borrowing that money at 3½ per cent. and the stock stands in the market at a price of nearly 104. It is accordingly obvious that this rate of 3½ per cent. is too high. What rate ought it to be? That is not a matter upon which I choose to dogmatise very strongly, but if you take a 20 years loan as a parallel you will find that today the Government 3 per cent. loan which is due to be paid at latest in 1953 stands at slightly over par—I think about 100½. Accordingly a 3 per cent. rate for a loan to the Unemployment Fund does not seem in any way too generous.

I accordingly move as my first Amendment that the rate of interest in this Clause should be reduced from 3½ to 3 per cent. That would, I believe, involve a saving of £500,000 in the present year. Probably the saving would decrease each year as the amount of the debt decreased, but at present half a million is something substantial for which we ought to be grateful. If, for example, the Chancellor had taken the £30,000,000 surplus of last year and applied it in payment of a portion of the debt upon the Unemployment Fund, at an interest rate of 3 per cent., £900,000 a year would have been saved. But since we are deprived of that particular remedy, it would seem at least a substantial mitigation of the burden on the fund if we were able to save £500,000 in the present year and thereafter a sum not quite so much but certainly always appreciable. I accordingly move my Amendment in that sense.

The CHAIRMAN

There is one thing I should like to make clear to the right hon. and learned Gentleman. When I said that these three Amendments were in effect one, I meant that they should be discussed together. I take it that the Committee will agree that if the whole discussion is taken on the formal question of the first Amendment in the name of the right hon. and learned Gentleman, the other Amendment should only be divided upon if necessary and should not be discussed, the whole of the discussion on the three Amendments to be taken on the first Amendment.

Sir R. HORNE

My Amendments are all part of one scheme, although it would obviously be possible to pass one or other of the Amendments without passing all.

The CHAIRMAN

We could have a discussion on them all.

Sir R. HORNE

As far as I am concerned and for the purpose of my argument I present them as one scheme. I come to what is involved in the first Amendment, which I think logically is better taken after the one which I have already discussed. The proposal in my first Amendment is that the two instalments of £2,750,000 in each year should be replaced by the figure of £2,500,000. That is to say that you would bring down the amount which had to be found in each year for sinking fund and interest charges by £500,000. I think that there is an obviously good ground, which must spring to the mind at once, for the suggestion which I am now making. The figure of £2,750,000 by two instalments in each year was fixed at a time when the debt was £115,000,000. The debt is no, longer at that level. At the time of the Budget it had already gone down to £105,000,000 or £106,000,000, and I am informed, although the Chancellor of the Exchequer knows very much better than I do, that by the month of July it will have fallen to £100,000,000. Accordingly we are dealing with a more modest proposition than that with which people were dealing when they drew up this Bill, and it is a very obvious reason for mitigating the amount of the charge which you are going to put upon the fund. My object, as the Committee will readily see, has been all the way to bring nearer the point of time at which the Statutory Committee will be able to propose to reduce the contributions.

Mr. MAXTON

Or increase the benefits.

Sir R. HORNE

I would remind my hon. Friend who makes that interruption that we have restored the benefit to the amount at which it stood at the time of the emergency in 1931, but we have still to restore the rate of contributions. My hon. Friend perhaps does not remember that in 1931 the workmen's contribution was raised from 7d. to 10d. and the employers' from 8d. to 10d., and the contribution of the Government from 7½d. to 10d. That is one of the sacrifices which still remains to be dealt with. Obviously it imposes a burden upon industry which is worth consideration. What does it amount to? The extra burden imposed on employer and workmen in 1931, leaving out the contribution of the Government, was £10,000,000 a year. That sum means a great deal to industry at the present time, particularly when it is a form of impost which remains whether business is prospering or not. It does not depend upon profit. If you only employ a man you pay : employment is the thing which is penalised. Accordingly it is of the first necessity that we should get the rate of contributions down. Is it nothing that the workmen's contribution should be raised by 3d. per week? I think that the Committee will agree that this is a matter which ought to be dealt with as soon as ever means are available to deal with it. This is one of the ways I suggest that mitigation might take place now, and the relief to the contributors come afterwards. That is the point I am endeavouring to make. If you are able to reduce the annual amount which you have to pay to sinking fund and interest obviously you have the fund in a very much better position from the point of view of the reduction of contributions.

There occurs, as one sees in this Clause, a proviso that the Statutory Committee may decide to devote more to the payment of debt than the amount prescribed in the Clause, and perhaps it would seem logical that I should append to my Amendment a suggestion that that proviso should be deleted, and that the Statutory Committee should not be able to take more than the specified amount, for this purpose. The reason why I did not put that forward is because, if the account which the Chancellor of the Exchequer gave us of the rate at which he anticipates this debt may be paid off proves to be accurate and his anticipations are justified, you may very easily have a situation in which the Statutory Committee will be able to do both things. They will both be able to make some reduction of the amount of contribution and at the same time contribute more to the paying off of debt than is stipulated for in the Clause. I hope indeed, that that may be so. If the debt is being paid off at the rate that has been rendered possible during the course of the last 12 months, that is an anticipation which anyone of us may fondly cherish. Accordingly I do not propose to suggest that the proviso should be deleted, believing and—I hope that I am justified in my belief—that the Statutory Committee will in all the circumstances, see that they have a duty to perform with relation to the reduction of the contribution before they proceed to deal too generously with the paying off of debt by sums in excess of the compulsory amounts which are stipulated in the Clause.

I think that I have now expounded the full effects of the Amendments which I propose except for one other point. We suggest that when the period of contractual obligations finishes and the new rate of interest begins, a similar diminution should at the same time be applied to the Sinking Fund; and we propose that the Sinking Fund should then have devoted to its payments in two instalments each year £2,000,000 instead of £2,500,000. It is obvious that if your rate of interest has come down to 3 per cent. it does not require nearly so large an instalment to enable the Government to meet the charges on the fund. Accordingly, that forms part of this catena of Amendments, first that the amounts to be applied to the instalment payments should be at the rate of £2,500,000 each half-year instead of £2,750,000; second, that when the rate of interest has come down to 3 per cent., as we hope, the amount to be applied to the instalment payments should be £2,000,000 instead of £2,500,000; and in the third place, that there should be substituted for 3½ per cent. in the rate of interest a figure of 3 per cent. I hope that I have made the Amendment clear to the Committee, and I suggest that it is one which in all the circumstances is fully justified. It involves no extra charges, but on the other hand it performs one great service which I am sure the Committee would like to see performed, and that is, to mitigate the charges which exist on the Unemployment Fund and give an earlier opportunity of reducing the burden on the contributors to unemployment insurance.

4.41 p.m.

Mr. GRAHAM WHITE

I and my Friends on these benches will certainly support the Amendment which has been proposed by my right hon. and learned Friend the Member for Hillhead (Sir R. Horne) and his Friends. I do not wish to dissent in any important matter from anything that he has said in recommending the Amendment to the Committee. I cannot help feeling, however, that the Amendment which he proposes would, if carried, go a very little way to effect the major purposes which he has in view or to bring about that substantial relief of the fund that he would have been able to do if the rules of the House and indeed the condition under which this discussion is taking place, had allowed him to make proposals which would have had a much greater effect on the interests of industry and of the unemployed. I make no quarrel with the very salutary rule which prevents a private Member or anybody save the Government from coming to the House with a proposition which places a charge upon the Exchequer, although I certainly think that in this instance it has prevented the moving of an Amendment which would have been in accordance with the wishes of the House and also, I think, with the wishes of the country. I do not propose to pursue that matter any further.

There are many grave and important reasons why Amendments should be made or why steps should be taken by the Chancellor of the Exchequer to reduce the emergency levy which was placed upon the fund in 1931. I think there is a general feeling growing that something less than justice has been done in that the benefits have been restored largely as the result of maintaining the emergency levy upon industry, and upon the employed at the rate of 10d. per week. There are possibly many disadvantages in having an Unemployment Bill like this before Parliament for such a long period of time, but there is one advantage. It has enabled informed public opinion to take effect with regard to the various provisions of the Bill. Opinion throughout the country gradually developed and became unanimous on the subject of the restoration of the cuts. Informed opinion from the day of the introduction of the Bill and its Second Reading has been unanimous in regard to what was called the old Clause 18, and which is now Clause 19. From the very initial discussions upon the Bill, informed public opinion has become unanimous that something should be done to remove the burdens which were placed upon the Insurance Fund under Clause 19. I have very clearly in mind a statement made by the Minister of Labour early in his Second Reading speech when he was dealing with the confusion into which the fund had got owing to the heavy liabilities which had arisen, and in which he said that a state of things had arisen which could not be maintained by any Insurance Fund whatever. The effect of Clause 19 is to make the Insurance Fund endure something which clearly no Insurance Fund ought to have been asked to endure or sustain, or could sustain.

Opinion with regard to this matter has indeed been formidable, and it has been unanimous. The "Times", the "Manchester Guardian," the "Economist," the "Spectator," journals varying widely in their outlook, have been unanimous that something should be done to give this relief. In this House we have had speeches from all quarters urging that something should be done to alleviate the burden. The right hon. Member for Hillhead said something about the burden upon industry. Indeed it is a very formidable matter. This country spends more money on its social services than any other country in the world. We spend more on unemployment insurance than any other country. I do not state that as a matter of criticism or objection, for I take pride in the fact. But that does not do away with the fact that at the present time it all means a very heavy charge upon industry. It is, moreover, a charge on industry at a time when industry requires all the help it can get. There are some reasons for believing that the recovery of trade which is taking place is due to causes some of which are transitory, and every little help at the present time the whole country will welcome.

The right hon. and gallant Member for Ripon (Major Hills) said nothing less than the truth when, speaking in connection with the Budget, he appealed to the Chancellor of the Exchequer to do the generous thing because he felt that that was what the country wished him to do in that particular regard. It is very important that something should be done, even if it is only the small measure which can be achieved under this Amendment. It is true that it is not the only possible alternative. If the rules will allow me I will make one or two suggestions which might be taken into consideration. There is an even more important reason for reducing the contributions under this Bill than any which has so far been brought to the notice of the Committee.

The Minister of Labour, and indeed the Government as a whole, have been at very great pains to ensure the continuity and the integrity of the Unemployment Insurance Fund proper under Part I. I certainly agree with them in their anxiety to do everything they can to keep the fund upon a solvent and self-supporting basis, but it is quite clear that from the moment when Part II of the Bill comes into operation the contributions which employer and employed will be called upon to pay every week will assume a very different aspect, having regard to the desirability of maintaining a solvent and permanent contributory system with fixed payments. From the moment that Part II begins to operate, if it carries out the duties prescribed for it, charged with the duty of relieving all the needs of the unemployed man who comes under it, including his rent, under a system from which the Poor Law stigma has been removed, a system in which, as we have been assured, the man who draws benefit will be as good a citizen as the man who draws benefit under Part I, a system under which the highest level of benefit prescribed under the contributory scheme in Part I will not be the ceiling of benefit but the ground floor, a system in which benefits will be given over and above the fixed benefit laid down in Part I, the Committee will readily see that in the mind of the unemployed men the question will arise, "Is it worth my while to go on paying 10d. a week in order to get perhaps a lower amount of benefit than a friend going down to the same Employment Exchange, and very likely to the same counter, who has really no stamp record and no industrial record at all worth speaking of, whereas I for years have been making my contributions and am now compelled to pay an emergency levy of 10d. in order to obtain this benefit?"

Where is the attraction of that scheme? How is it going to continue? How is it going to be possible to administer it? Would not the same question present itself to the mind of the employer? He sees men going to the exchange and drawing allowances to which there has been no deterrent in any shape or form. There is to be no stigma. The Prime Minister assured us at Seaham that the means test in future was to be humanised or administered in such a way that it was not to be a deterrent to a man seeking benefit. I am driven therefore to the conclusion that unless there is some catch in Part II——

Mr. ANEURIN BEVAN

Obviously there is a catch.

Mr. WHITE

I am stating the Government case and accepting the Government's statements at their face value. I have, perhaps, said enough to convince the Committee that there is from that aspect an urgent need to do something, and, I would say, something much more drastic. I am told that it cannot be done now. But the matter is in the hands of the Chancellor of the Exchequer and he can do it with the assent of the House. There is no question about that. We cannot do it; we cannot table any suggestion. But from that point of view, from the point of view of social justice and the restoration of the cuts, from the point of view of the vital importance to industry and the not unimportant matter of the preservation of the contributory scheme under Part I, it is essential that something should be done. I do not think any Member of the Committee can fail to be driven to the conclusion that it is inevitable and that the Chancellor of the Exchequer must take some steps. If he cannot take any other step let him at least accept this Amendment.

Here I am a little in doubt as to whether I shall be strictly in order, but I think that with a little ingenuity there are other ways of dealing with the matter. My right hon. Friend is proceeding on the principle of reducing the charge on the debt. There are other ways in which that can be done. The finance of the Bill is based upon an assumption of a certain number of unemployed on the live register. If my right hon. Friend were to justify his optimism and to assume that there would be another 100,000 less on the live register, that would give him a basis of £3,000,000 to £4,000,000 more in the fund, and, utilising that, he would be able to come to some different arrangement which would go perhaps even further than the suggestion of the Mover of this Amendment. He might raise the contribution of the State to 1s. and reduce the contribution of employers and employed forthwith to 9d. That would cost him about £4,000,000. But it is important that we should aim at a reasonable contribution for unemployment insurance benefit. I think that for such a contribution at the present time we should keep in our minds 6d. for the employer and 6d. for the employed.

If we cannot go all the way now, we should at least go some of the way. On the other hand it might well be that a sliding scale of contributions could be devised upon the principle that the contributors, the employers and employed, should never bear less or more than one-third of the charge of the debt which exists on the fund; that is one-third together. That is not a matter which would present very great difficulty, and I have no doubt that the Treasury with their resources would be well able to devise something of the kind. It is quite true that in connection with the Budget statements these arguments have been stated before. But I have been struck by the lack of answer from the Government. To the right hon. Member for Hillhead there has been really no answer. The Financial Secretary to the Treasury, in reply to the right hon. Gentleman's very powerful speech, said : "Oh, it is the customary thing and the orthodox system to repay a debt when money has been borrowed." That is indeed a proposition from which no one would dissent in a general way. But in this case, as has been pointed out by more than one speaker, this is the repayment of debt, and it is moreover a repayment of debt which is running at a rate of interest higher than that of any other Government scheme except the Five per cent. Conversion Loan.

Then there has really been no effective answer given to the economic and social arguments which have been put forward against the general proposition under Clause 19, that this debt should be a charge upon the fund. We unfortunately could not move an Amendment which was devised to give effect to the recommendations of the Royal Commission. It is true that the Royal Commission, after very mature consideration, said it was fair that employers and employed should bear some portion of the repayment of this debt. But I was always struck, in reading that portion of the report, by one observation which was made. The Commission said : "We have had in mind the immediate necessities of the Exchequer." It is not unreasonable to assume that if the Royal Commission were reconsidering this matter, if, for instance, the Chairman of the Royal Commission had been asked to give advice on the matter, the Commission might very well have come to a very different determination from the recommendation which they made at the time the report was issued. The Royal Commission did make that recommendation, which I think, on the whole, recommends itself to the common sense and fairness of the country, and I think the Committee should be satisfied with nothing less. I think it is the allocation of the debt recommended by the Royal Commission that the Committee would wish to see put into the Bill.

I have thought about this matter a good deal, and I do not see any flaws in the arguments introduced by some of my hon. Friends in all quarters of the House. My right hon. Friend the Chancellor of the Exchequer, rebutting this suggestion the first time it was made, said he objected to the proposal because it seems to me to encourage that slovenly sort of idea that if you put a charge on the State, nobody is going to have to pay it. I cannot conceive a worse way of starting a new fund on a self-supporting basis than to suggest that it does not matter what money the fund runs up in the way of debts, because in the end the State will bear it."—[OFFICIAL REPORT, 4th December, 1933, cols. 1355–6, Vol. 283.] That is an observation with which I am in complete agreement, but I would suggest to the Committee that it is not applicable in the present case, because His Majesty's Government have devoted themselves with great ingenuity and care to the setting up of a Statutory Committee whose one object is to keep the Insurance Fund under constant and vigilant supervision and to see that there shall be nothing done which will allow it to get into debt or to approach in any way the state of insolvency or difficulty at which it had arrived before the emergency legislation of 1931. I sincerely hope my right hon. Friend the Chancellor of the Exchequer will have regard to the important and weighty arguments which have been addressed to him from all quarters of the House and that he will see his way not merely to accept the Amendment of my right hon. Friend, but to do something far more substantial, because that is what I think the country expects.

5.3 p.m.

Lieut.-Colonel CHARLES KERR

It is with some trepidation that I intervene, in view of the two very able speeches that we have had on these Amendments. The Amendments on the Paper are aimed at helping the fund, and I beg my right hon. Friend the Chancellor of the Exchequer to be sympathetic in considering them. What is one of the reasons why this Clause is in the Bill at all? It is well known that during a certain period—I want to be as non-controversial as possible—there was a large number of people who received transitional payment who ought not to have had it, and that undoubtedly swelled the debt on the fund. I feel that, that being so, it is very hard on those who have, so to speak, played the game and contributed to the fund that their interests should be adversely affected in any way through that fact, and I hope the Chancellor of the Exchequer will bear that in mind in considering these Amendments. My right hon. Friend the Member for Billhead (Sir R. Horne), who moved the Amendment, seemed to suppose that there was no hope that this 4⅝ per cent. should be in any way reduced at the present time. I have read the answer that was given by the Financial Secretary to the Treasury yesterday, and I am wondering whether, behind those words, there is not a doubt that something might be done. He said : The average rate of interest on the debt now outstanding is for the time being 4⅝ per cent."—[OFFICIAL REPORT, 30th April, 1934; col. 31, Vol. 289.] What does "for the time being" mean? Does it mean that the arrangements that have been made for the money that has been borrowed at various times for five years have got to go on definitely, each borrowing, for five years? We have had conversion loans and we have had the paying off of debt and the re-issue of loans at a lower rate, and I am wondering whether it is possible now, in view of this very high rate of interest and of the fact that the Government can borrow very easily at 3 per cent., to pay off some of these outstanding debts earlier than the exact length of time for which they have been borrowed and, as I say, make a new loan at a lower rate. When we consider that it is the Government borrowing from one pocket and lending to another, because that is what it really is—it would be so in a business—I feel that something of this nature, in view of the state of the money market, ought to be considered and might be possible.

The rate that is paid by the Post Office Savings Bank and so on is only 2½ per cent. There is a tremendous difference between that and 4⅝per cent., and I hope the Chancellor of the Exchequer will bear that in mind and see whether, in spite of what has been said in the Budget and in spite of what has been arranged—I take it that the Government, in a matter of this sort, are all-powerful—this 4⅝ per cent. cannot in some way be reduced at once. Behind all this—I am speaking now for myself—I feel that we ought to aim at some comprehensive insurance scheme which would embrace many more things than unemployment only, such as pensions and so on. I do not know whether I am getting out of order, but that is what is at the back of my mind. In this reconstruction of all insurance, I feel there is a great aim that we all have at the back of our minds, a great extension of the general idea of insurance; and with those few words I support most heartily the Amendment so ably moved by my right hon. Friend.

5.9 p.m.

Mr. JAMES REID

In my view, the question of principle, which will later fall to be discussed on the Question, "That the Clause stand part of the Bill," is not involved in any of these Amendments. My mind has fluctuated to some extent on that question of principle. There are very powerful arguments for the view put forward by the Royal Commission, and there are also very powerful arguments, which have not been developed but have been indicated by the Chancellor of the Exchequer, in a contrary direction, and in order to support this Amendment, it does not seem to me in the least necessary that I should have made up my mind one way or the other on the general question of principle, as to whether the whole debt should be imposed on the fund or a part of it assumed by the Exchequer. For the purpose of this Amendment, and indeed for the purpose of the Measure as a whole, I have assumed that the Chancellor's decision is final—I am not inclined to dissent from it too violently—and that the fund is to bear the whole debt, but let us see whether that principle is in any way in conflict with any of the Amendments which appear on the Paper in the name of my right hon. Friend the Member for Hill-head (Sir R Horne) and others.

When the Bill was drafted, the debt was £115,000,000. I do not know whether the exact rate of interest at that time has been published, but the Chancellor has himself said that 18 months ago £5,500,000, namely, the instalment proposed in the Bill, was required for interest alone, and accordingly, unless there had been some fall before the Bill was introduced, it is plain that in the first year, if things had remained the same as last autumn, there would have been no sinking fund provision at all and the £5,500,000 would all have been required for the purpose of paying interest.

Now let us take the present position. We know that the debt is in the neighbourhood of £106,000,000, and we know that the average interest now payable is 4⅝ per cent., and, if my arithmetic is right, that means that if things remained in the position in which they are at this moment, the interest charge would be £4,900,000 per annum. Therefore, the instalment which we propose—leaving in the first year the somewhat negligible sinking fund of £100,000—in the altered circumstances produces exactly the same result as the instalment which the Government proposed in the circumstances of last autumn. We do not ask that that instalment should be altered for a period of four to five years from the present date. Next year a certain amount of the high interest on the debt will have been paid off, and a certain amount of that will have been re-borrowed at 3 per cent. or 3½ per cent. Accordingly, this year there will be considerably more than £100,000 to put towards the sinking fund, and by the time the last of those loans runs out there will be over £1,000,000 per annum to put to sinking fund. That seems to me to put it very much in the same position as the fund would have been in if the circumstances had remained unaltered since the Bill was first introduced.

Mr. CHAMBERLAIN

If I understood my hon. Friend correctly, he suggested that the £5,500,000 at the time when the Bill was framed and introduced represented interest alone. If that was what he said, I think he is under a misapprehension. The phrase of mine to which he referred was merely a quotation from the Report of the Royal Commission, who stated that at the time they made their report £5,500,000 was required for interest alone.

Mr. REID

I thought I had explained it, but perhaps I have been rather too brief. I intended to say that 18 months ago £5,500,000 was required for interest alone. I have no figures. I have not been able to discover the average rate of interest in October last, but it certainly was not less, I take it, than the 4⅝ per cent. which is the average to-day, and if I multiply £115,000,000 by even the figure of 4⅝ per cent., which includes, as one can see from published statements, a certain amount of money borrowed recently at 3½ per cent., I find that the amount of interest required for £115,000,000 is £5,300,000. Even if there has been no fall in the rate of interest between October last and the present date the initial interest charge contemplated when the Bill was drafted must have been at least £5,300,000, whereas the initial interest charge required now is only £4,900,000. Accordingly, on any method of calculation, the interest alone requires £400,000 per annum less in the present circumstances than it required in the circumstances of October last. Therefore, I am entitled to say that the first Amendment merely brings up to date the principle which the Government themselves enunciated in October last.

The whole question which we have to discuss this afternoon can be stated very shortly. Is it desirable that the fund should pay large instalments and pay off its debt quickly, or is it desirable that the fund should pay smaller instalments and pay off the debt more slowly? I have not been able to calculate the exact figures, but I should imagine that if you take the present £106,000,000 of debt and apply the £5,500,000 instalment to it, you will pay off the debt in something like 30 years. The exact figure can be calculated, but it is certainly less than 40 years, whereas the Royal Commission recommended 65 years. It seems to me that it is better to achieve the results which we all desire by way of the restoration of the 1931 position at the expense of a somewhat prolonged period of repayment, rather than incur a higher burden, which will not benefit this generation, but will only benefit the people who will be living in the period of 30 to 60 years hence. It is those people the Government are trying to benefit. They are not benefiting the present members of the fund and they are not even benefiting themselves, because they are not benefiting the Budget, so far as I can see.

It is obvious that if a larger instalment is insisted upon it will not be available for the Chancellor of the Exchequer next year for the purpose of spending on, say, more aeroplanes, but it will have to be applied towards the reduction of the debt. It will not be available for the general purposes of the Budget. Therefore, it is not as if the question were whether we are on the one hand seeking to benefit the fund, and making it more difficult to restore the allowances to the Income Tax payer, because the Chancellor of the Exchequer obviously cannot use the fund's money to give to the taxpayer. That would be impossible. The fund's money must be used for paying off the fund's debt. Let us leave out of mind the question that this money which the Government are getting over and above what we think they should get can be applied to ulterior objects. It cannot be applied to the restoration of allowances, to Supplementary Estimates or to an annual rise in such things as pensions. It must be applied to the reduction of this debt, and nothing else. Therefore, the sole argument between us is, is it better from the point of view of the fund and the country that the fund should pay off its obligations quickly or slowly. I can see no other point involved in any of the three Amendments.

I come to the second Amendment. That Amendment proposes that when the rate of interest falls from 4⅝, which is the rate at present, to 3½ per cent. as the Bill proposes, or to 3 as we propose, the annual instalment should fall by £1,000,000. The annual saving as between this date and 1938, when all the five year notes have expired, the saving in interest will be considerably over £1,000,000, even if the third Amendment is not accepted. If we accept the 3⅛ per cent. the fall in interest will be 1½ per cent. on £106,000,000, which amounts to a considerable and appreciable excess over £1,000,000. Therefore, there will still be quite a reasonable Sinking Fund available in five years from now even if the instalment then payable is reduced to £4,000,000. The sum available for Sinking Fund will, of course, grow from year to year as the rate of interest payable on the debt falls. It may be that the figures which we propose would mean a very long period of amortisation, perhaps 50, 60, 70 or 80 years, but it does not seem to matter very much from the point of view of the stability of the fund or, the credit of the country whether the period of amortisation is 30 years, 50 or 70 years. We are paying off our National Debt in 30 years and yet the credit of the country is second to none in the world. Why should not the credit of the fund be equally good if the debt is being paid off at a slow rate?

The Chancellor of the Exchequer recognises that in the present circumstances it would be highly injudicious to pay off the National Debt at any rate except by way of such surpluses as he can gather. Equally, would it not be highly injudicious in respect of the fund to pay off the debt by annual instalment? Would not the better way be to take chance windfalls in the same way that the Chancellor of the Exchequer takes chance windfalls by way of surplus to pay off the National Debt? I should like to see the Committee in a position where they can, if they want, accelerate the amortisation of the debt. If they come to a prosperous series of years then no doubt they would pay off the full £5,500,000 and perhaps more, while on the other hand if they come to a year which is not so good, obviously, it will be better to keep down the payment of debt for that year rather than have to stir up trouble by cutting down benefits or increasing contributions. This will give a measure of elasticity. In a bad year if the Committee are entitled to reduce the payment of debt for that year they could maintain the benefits and contributions at the old level, but if they are under a hard-and-fast rule as to the payment of debt then they will have to go through the trouble of altering either the benefits or the contributions.

It would be very much better that the payment towards debt should fluctuate than that the benefits or the contributions should fluctuate. We are, however, talking about a somewhat remote future in this matter. Under our Amendment the Chancellor of the Exchequer is going to obtain almost as much for the next five years as he is asking for in the Bill. It is only after the five years have elapsed that there is any serious discrepancy between the amount that the Chancellor of the Exchequer asks for and the amount which the Amendment proposes. The immediate discrepancy is only £500,000 and the ultimate discrepancy is £1,500,000, a considerable sum. I do not want to detain the House by repeating the arguments in favour of the statement that it is worth saving £1,500,000, even if it means prolonging the payment of the debt for another 30 years.

5.25 p.m.

Mr. MAITLAND

I do not intend to follow my hon. Friend in discussing the Amendments in detail, but I should like to thank my right hon. and learned Friend the Member for Hillhead (Sir R. Horne) for the very clear statement he made and the lucid way in which he made his case. May I bring to the notice of the House one or two matters that were in the minds of the Royal Commission in regard to the circumstances in which the debt was created. On all sides in this Debate has been shown a desire to maintain the solvency of our insurance scheme and also to put it on a self-supporting basis. When the Royal Commission were dealing with this aspect of the unemployment insurance question they made the observation that if the scheme is to be self-supporting it must provide for benefits and the cost of administration out of its own resources. On the question of solvency they remarked that no scheme could claim to be solvent whilst it had a debt of £115,000,000.

The debt of £115,000,000 is a debt arising over a period, roughly, of 11 years, from July, 1921, to March, 1932, and there can be no question that some portion of that debt was created by the giving of extended benefits, uncovenanted benefits and transitional payments which were outside the original scope of the Unemployment Insurance scheme. That definitely represented the action of successive Governments in dealing with an abnormal situation through the machinery of the Unemployment Fund. Therefore, to some extent the action of the State itself is responsible for the amount of the debt. Benefit was paid to persons who had fallen out of insurance or had forfeited their insurance rights in one form or another. So far as I can see, the argument that no fund can expect that a debt in respect of its work should be transferred to the Exchequer, is plausible, but not quite complete. Another argument equally plausible, that no Government should shoulder obligations upon a fund beyond the objects for which the fund was created or in excess of the restrictions originally imposed is likewise incomplete. If these conditions were rigidly adhered to it would prevent any necessary alterations based upon wisdom and accruing from experience. That would surely be unfortunate.

The Royal Commission recommended that two-thirds of the charge of Debt Redemption should be borne by the Exchequer. I have always thought that the best answer from the Exchequer point of view to that suggestion is that of the £115,000,000, £76,000,000 represented the accumulation of debt over two years from April, 1930, wholly attributable to insurance benefits when the whole cost of transitional benefit was also borne by the State. It is just as well to bear in mind in considering the arguments that are being advanced to-day, that the Exchequer has made definite contributions over and above the original statutory commitments, and that it is not a question of the Exchequer trying to get rid of liability. We must bear in mind that the Exchequer is responsible for one-third of the contributions to the fund and also that the Exchequer has recently made a grant amounting to £3,000,000 per annum to the local authorities in respect of public assistance.

It is well that we should have these facts in mind. Suppose that the £31,000,000 surplus was applied as suggested by the right hon. Gentleman—in reduction of this debt—and that the period was extended to 65 years instead of the 40 years, as proposed by the Chancellor of the Exchequer, if that was done it would mean an annual charge for interest and debt redemption of about £3,000,000. The proposals of the right hon. Gentleman are very modest, they do not go nearly as far as was recommended by the Royal Commission; and I personally do not think we should go as far as the commission suggested. If the Chancellor of the Exchequer cannot accept the Amendments of the right hon. Member for Hillhead I would ask him to consider extending the period of 40 years to that recommended by the Royal Commission. That would cover a period of 65 years, and the rate of interest upon which they based their calculations was 3½ per cent. If he could accept their recommendation with regard to the term the effect would be that the solvency of the fund would be undoubted, the annual payments would be reduced, and it would also be possible, at an earlier stage, to review the question of the contributions or consider an increase in benefits.

There is one more thing I should like to say. There is something more than the sheer aspect of pounds, shillings and pence involved. The question has a psychological aspect. There is in the mind of a large number of people who are engaged in occupations under the unemployment scheme a feeling that they should not be expected to bear the whole cost of the fund. I agree that the exact proportion represented by actions of the Government, in the way of extended benefits and charges which have been involved by heavier calls made on the fund, is a matter of opinion, but in the interests of the members of the unemployment scheme and the desire of the Committee to maintain it in a state of solvency, to make it beyond all question self-supporting, I ask the Chancellor of the Exchequer whether he can revise these proposals in the spirit in which so many national problems have been met during the last few years. I ask him to consider a revision of his first proposal, especially having regard to the changed financial considerations and the psychological aspect of the matter. No one desires to convey to those who pay unemployment contributions week by week that we are not prepared to meet their peculiar difficulties in the same national spirit as those in which other national difficulties have been faced.

5.35 p.m.

Mr. KINGSLEY GRIFFITH

An extremely interesting speech on the exact effect of the Amendments before the Committee has been delivered by the hon. Member for Stirling (Mr. Reid), and I am sure we are indebted to him for explaining the matter so clearly. At the same time, if I thought there was anything in it but a question of paying off by large or small instalments I should not regard the Amendment with the same amount of interest as I do at present. What I value is the principle, which the hon. Member for Stirling said he was ignoring. I do not think that the right hon. Member for Hillhead (Sir R. Horne) was ignoring the general principle, in fact, I gather from a question which he put to the Financial Secretary to the Treasury that he was trying to find out something which would be in order, which would not increase the charge, but which at the same time would enable him to put before the Committee the general principles of the fund. Hon. Members who are supporting these Amendments are not, I think, so much concerned with the narrow question of large or small instalments, they desire to reduce the burden on the fund. I regard the Clause which is now Clause 19 in the very closest connection with the preceding Clause, which is now Clause 18. I am thinking all the time of what the Committee will have to face when every February they make their report as to the financial position of the fund.

The present financial position, in the opinion of the Government's advisers, has enabled them to restore the cuts imposed on the unemployed, but that restoration of cuts is an extremely precarious matter. It was not originally regarded by the Government as possible, but then employment improved and they thought it could be done. When a review takes place February after February the Committee will always have to consider whether it is possible to continue these benefits without increasing contributions, a matter which no one can contemplate with equanimity. It is an extremely precarious matter, and a comparatively small retrogression in employment may enable the Committee to say that they could not carry it further. The first thing they will have to consider in making their financial review is this fixed provision for repayment of debt, and as long as that remains the ability of the fund to pay out to its ordinary shareholders is prejudiced by this rather large debenture issue which is hung round their necks from the start. That is what we have to deal with. I am no friend to the Bill as a whole, but I am friendly to the objects of the Government, which I have no doubt are to give the squarest deal they can to the unemployed. But they are not really giving themselves a chance in starting off again, in making this new start to the system of unemployment insurance, if they burden it from the beginning with the whole of this burden which does not altogether belong to the fund at all.

The psychological aspect, to which the hon. Member for Faversham (Mr. Maitland) called attention, is also of the gravest importance. Any credit that the Government may gain in the eyes of the nation for restoring the cut on the unemployed is to a large measure discounted if they are made to feel that it has not been done by the Government at all, that it is an accident, and that it is liable to be swept away by an accident in another direction. An enormous effect would have been created in the nation if the Government, by some action of their own had showed that they were prepared to share prosperity now with the nation generally, just as the nation shared with the Government in the time of crisis. As long as this burden remains undiminished it is inevitable that those who suffer most are not getting the relief that they ought to get; and I am afraid it will continue. I do not know whether the Chancellor of the Exchequer has noticed the strong expressions of opinion not only in the Press generally but in the "News Letter," which not only supports the Government but which has no other object on this earth except to support the Government. That is what it is for, and they press on the Government : Is it too late to revise the schemes of the Budget and the Unemployment Bill so as to make this valuable concession. From what has been said by the right hon. Member for Hillhead I gather that he has altogether despaired. I am sorry to hear that. He, apparently, is content to take this small measure which he has managed to squeeze within the rules of Order in its place. I take anything, however small, which goes in the right direction. I ask hon. Members to consider the general question and to show the Government by their vote that they regard the assumption of this burden now put on the Unemployment Fund as intolerable, as unjust to the contributors to the fund, and something which for the credit of the nation should be removed at the earliest possible moment.

5.41 p.m.

Mr. AMERY

I should like most earnestly and in the most friendly spirit to support the appeal which has been made to my right hon. Friend from all quarters of the Committee. It is true, as the hon. Member for Stirling (Mr. Reid) has said in a very lucid speech, that the Amendment does not traverse the principle, if it be a principle, which has been laid down by the Chancellor of the Exchequer, that this burden must rest upon the contributors to the Unemployment Insurance Fund. But it does to some small extent meet the principle upon which we are all united, that is, of doing some justice to the actual present contributors to the fund. After all, there is a very strong case to be made out for the employed workers as well as for the unemployed. The employed workers, the men who have been employed throughout all these difficult years, or who have only fallen out for a short time, represent the very cream of the working classes in their trades. To many of them it is in some sense a hardship that they should be compulsorily invited or made to pay for the unemployment of others. But they are quite willing in an insurance scheme to bear their contributions to insurance, even if they have no need of it.

What is not fair is that they should have to bear another burden, the burden of the uninsurable unemployed, which by this Bill the State admits to be its own concern and not the concern of the fund—a view which was taken by the commission. To my mind it is no answer to the suggestion of the commission that two-thirds, or £76,000,000, should be borne by the Exchequer, for the Exchequer to say that in another direction they have incurred more expenditure in the relief of local authorities. That may help people who are uninsured, who are beyond insurance, but it does not help the contributor to the actual scheme. Nor to my mind is it any answer to say that the scheme is better off than it was. It is of the greatest importance that the scheme should be better off, both in order to show that insurance is better than public assistance, a point of no small value, and also to redress the cut imposed on the insured workman when his contribution was increased from 7d. to 10d. two and a-half years ago.

It seems to me that there you have a case for redress quite as strong as that of any other class of the community, a case to which my mind would only be fairly and fully met by relieving the fund of the £76,000,000, as the Royal Commission recommended. But it would, at any rate, be met in some small part by the Amendments. These Amendments, even if they still leave the burden on the fund as a whole, ease the position for the man who has been in insurance during the last few years and who is in insurance and paying the extra contributions to-day, instead of relieving somebody in 30 or 40 years hence. From this point of view I cannot help suggesting to my right hon. Friend that it would be a grave disappointment to those among the supporters of the Government in the House of Commons who approve of the general principles of the Measure, if he were not prepared to make, at any rate, this little concession as a sign of good will, even if he is not prepared to make the major concession which some of us consider ought to be made.

5.46 p.m.

Sir JOHN SANDEMAN ALLEN

I think we are all in sympathy with the purpose underlying the Amendments. While I am sure the Chancellor of the Exchequer has had the matter under close consideration, and will, if possible, do something to meet the case which has been made, I trust that anything which he may see his way to do will not be in the form proposed in the Amendments. We have been much occupied, and rightly so, with the Unemployment Insurance Fund, but it should not be forgotten that this matter affects another fund as well, and that is the Savings Bank Fund. I hope the danger of interfering with the one fund for the benefit of the other will be borne in mind, because there is a certain amount of anxiety on that point.

Sir R. HORNE

I did not suggest infringing that fund in any way.

Sir J. SANDEMAN ALLEN

I realise that such is not the intention of my right hon. Friend, and I merely rise to call attention to the possibility that by cutting down the interest you might produce a dangerous effect as regard that other fund. I have not gone into the details thoroughly, and I am sure that the right hon. Gentleman the Member for Hillhead (Sir R. Horne) has had all the facts before him. I feel sure, however, that the Committee will excuse me for intervening briefly in order to call attention to this matter.

5.50 p.m.

Mr. CHAMBERLAIN

We have now had a number of speeches from all parts of the Committee—at least all parts but one—and all in support of my right hon. Friend the Member for Hillhead (Sir R. Horne), and I dare say there are other hon. Members who would desire to speak in the same sense. I think the time has now come when it would be convenient for the Committee if I were to make a statement as to the attitude of the Government upon the considerations which have been put before the Committee. It has been, I think, made clear that those responsible for the Amendments which we are considering have only put them down because they found that those Amendments represent the furthest they can go under the Rules of Order, towards the much larger proposition which many of them would like to press upon the Committee. I should find it a little difficult to make plain the position which I take up on this matter unless I touched for a few minutes upon that larger question. The situation in regard to the relations between the debt of the Unemployment Fund and the Treasury has changed considerably since the report of the Royal Commission in 1932. It has changed even more recently than that. It changed on the day on which I made my Budget statement. It will be remembered that before that statement was made the right hon. Gentleman the Member for Darwen (Sir H. Samuel) appealed for a reconsideration of the decision to leave the debt largely on the fund. He made his appeal upon the basis that it would be impossible to restore the cuts unless the fund were relieved of the debt. Perhaps it would be convenient if I read his actual words : If the fund is charged with £5,500,000 a year that is almost exactly the amount that would be required to restore the cuts. If it is to be paid to the Exchequer, those cuts cannot be restored until the money is available from some other source. … There is a widespread feeling that at least the report and recommendation of the Royal Commission should be adopted and that this is essential if, in the near future, the cuts are to be restored."—[OFFICIAL REPORT, 12th February, 1934; col. 1658, Vol. 285.] The Budget statement made shortly afterwards showed that the right hon. Gentleman was mistaken in that view, and that it was possible to restore the cuts although the debt still remained a charge upon the fund. Therefore, that is no longer the basis of the appeal or the representation that the burden of the debt should be taken over by the Exchequer. What, then, is the ground of this representation? It is still partly the report of the Royal Commission. It is, I think, partly the argument which has been repeated several times, and last by my right hon. Friend the Member for Spark-brook (Mr. Amery) that this debt was incurred for people who had fallen out of insurance. It is also partly based upon the view that the increased contributions by employers and employed are a heavy burden upon industry, and that it would be to the general interest of the country that they should be reduced.

I think I have fairly stated the principal grounds upon which the representation is made. With regard to the question of how the debt was incurred, I need only recall once again to the Committee a passage in the Report of the Royal Commission which seems often to be forgotten, in which they point out that no less than two-thirds of the debt was entirely incurred in insurance benefits and not for people who had fallen out of insurance. As to the rest of it, they say there are no data available to show how much was incurred for insurance benefit, and how much for extended or un-covenanted benefit. Therefore, although I frankly admit that there may be some part of the remainder which was used for that purpose, we cannot tell how much. We know definitely, however, that two-thirds of it was incurred for insurance benefit alone. In regard to the contributions, I entirely agree that the increased contributions must form a considerable burden upon industry, and I am very anxious to see them reduced. I cannot take the view, however, if the view indeed is held—and I am not sure it is held—that the increased contributions were part of the emergency measures which were generally classed together under the name of "the cuts."

The fact was, as the Royal Commission themselves point out, that the fund was in an increasingly insolvent condition owing to the continuous rise in the figures of unemployment and these contributions, if the fund had been properly administered, ought to have been raised a considerable time before. Of course, as unemployment comes down it is reasonable and natural to suppose that the consequence should be reflected in some reduction in the increased contributions that were put on to meet the phenomenal rise of unemployment. The Committee is now well aware that there is every prospect, with unemployment moving as it is at present, that there is going to be in this fund a substantial surplus after paying the debt charge and after the restoration of the cuts. It is true that under the provisions of the Bill the disposition of that surplus is not in the hands of the Government but in the hands of the Statutory Committee, but, of course, it is provided in the Schedule that among the matters which the Committee may take into consideration, and on which they may make recommendations, is this matter of the contributions. Therefore, without saying anything, which it would be very improper of me to say, which might be interpreted as a direction to the Committee, nevertheless it is clearly within their power to recommend that there should be a reduction of the contributions, and it seems to me pretty clear that there will be a surplus which will allow them to make some recommendation of that kind.

Mr. LAWSON

I am sorry indeed to interrupt, but I must say that I do not think the right hon. Gentleman is addressing himself to the Amendment on the Paper. The Committee will observe that we have not said anything at all upon this matter, because we have thought from the first that there is a more fundamental way of dealing with it by which the Chancellor of the Exchequer could have replied to the really important point. We have past experience of the limitations attaching to discussing this matter as we are discussing it now. But if the Chancellor of the Exchequer is to be allowed to widen the discussion in the way that he is doing, then it seems to me that there is going to be a Second Reading Debate upon what is, after all, a very petty point compared with the whole principle at issue in this connection.

The CHAIRMAN

I have been following the speech of the right hon. Gentleman, and I noted what he said at the outset as to introducing this matter. I think I can see sufficiently far ahead to appreciate what is in his mind and to realise that he is definitely leading up to a point on the Amendment now before the Committee.

Mr. CHAMBERLAIN

I hope before very long to come to the particular point of the Amendment, but I must prepare the way a little, and deal with the various matters which have been raised by hon. and right hon. Gentlemen in connection with these Amendments. I desire once again to refer to the report of the Royal Commission, because its recommendation is one of the principal reasons which, as it seems to me, have been advanced to show that the Government ought to take over part of the debt. I must remind the Committee of the circumstances in which the report of the Royal Commission was made. The hon. Member for East Birkenhead (Mr. White) purported to quote from the report certain words. Those were not the exact words of the Commission's report. They are, I think, in substance, to be found there, but in application to an entirely different point from that to which the hon. Member was directing them. He said that in making this recommendation—that is, the recommendation to which he had been referring—the Royal Commission stated that they had been guided by the present exigencies of the Exchequer. I think the hon. Gentleman will remember that, as a matter of fact, the words used by the Royal Commission about the exigencies of the Exchequer did not at all refer to the proportions of the debt which should be paid by the fund and by the Treasury respectively, but to the number of years over which repayments should be spread. They were recommending that the Exchequer should take over two-thirds of the charges upon the debt, in other words, £3,000,000 a year, on the assumption, as the hon. Member pointed out, that the repayments would be spread over 65 years. It was in that connection that the Royal Commission said they had in mind the present exigencies of the Treasury upon whom they did not wish to put too great a burden at that particular moment. When we consider the recommendations of the Royal Commission that the Exchequer should take over two-thirds of the debt, do not let us forget paragraph 677 of their report, from which I should like to read a few words : In the case of the Exchequer contribution"— this is not the contribution to the debt, but the contribution which is parallel to the contributions of employers and employed— we are of opinion that in principle the main cost of insurance against occasional unemployment should fall upon industry, and accordingly that the Exchequer contribution should, in principle, be less than the contribution of either employers or workers. They go on to say how they think the Exchequer contribution should be fixed, and they continue : So long, however, as the finances of the Insurance scheme remain in their present precarious position, we cannot recommend that the principle of a smaller Exchequer contribution should be translated into practice. I beg hon. Members to weigh very carefully the meaning of those words. As long as the fund was in the precarious position at which it stood at that time, the Royal Commission could not recommend that the Exchequer contribution should not be less than the contributions of the employers and the employed. The obvious conclusion was that when the fund was out of that precarious position, when it had once more become solvent, the principle which they put forward could be brought into practice. The Government have not adopted that proposal. They have kept the Exchequer contribution at one-third of the total contributions, and they are not proposing to alter that. But that must be borne in mind when hon. Members refer to the recommendation about the debt, because the two things must be coupled together, and if you take one into account you must not forget to take into account the other also.

There is one other point I want to put forward. I know that a great many hon. Members feel strongly on this subject and that they are moved by a number of considerations, all of them, no doubt, considerations which are proper. I do not wish to criticise them in any way, but I do ask them to believe that if I take a different view from them on the matter, I hold my convictions just as strongly and sincerely, and that I have to take into account information which perhaps is not equally available to the whole House. Once more I want to put this point. The reduction in unemployment, when it comes and as it comes, is promptly translated into benefit for the Unemployment Insurance Fund. It shows an immediate surplus and an immediate change in its position. The reduction in unemployment does not show itself with equal rapidity in the finances of the nation. Ultimately, we get the benefit, but it comes very slowly. When people talk about what is fair to those who are concerned with unemployment insurance, they ought not to forget that they owe, also, fair treatment to the taxpayer in general, and I who am continually hearing and reading every day of how next year it is hoped that various other taxes may be reduced, or that various other cuts may be restored, or that various items of expenditure may be found possible, I see building up in front of me an amount of extra expenditure or extra demands upon income which make me feel that, if it is a question of who can spare the money, the fund is in a very much better and sounder position than the Exchequer. Therefore, I have not felt able to accept the view that any part of this debt should be charged upon the Exchequer. Since Amendments to that effect are out of order, my right hon. Friend the Member for Hillhead has put the three Amendments on the Paper. I want to come now——

Mr. LAWSON

This is pretty thick. This is a Second Beading speech.

Mr. CHAMBERLAIN

I am speaking within the Ruling of the Chair. With regard to the Amendments on the Paper, I say at once that I am very anxious, if I possibly can, to show those who have been making the appeals to me that I desire to meet them. I have examined the Amendments very carefully with a view to seeing how far it is possible for me to go in the direction of my right hon. Friend. The three Amendments are to be taken together. The first has the effect of reducing the annual payments from £5,500,000 to £5,000,000; the second reduces it after a definite period to £4,000,000; and the third reduces the rate of interest. As they are being taken together it does not matter which one I speak on first, and I should like to come to the third Amendment. What was my right hon. Friend's argument on that point? He said that at the time when the arrangement for 3½ per cent. was made between the Treasury and the National Debt Commissioners, that rate represented fairly the current rate of interest for loans of about this term. Since then, he said, the rate of interest had fallen so that it was now possible to borrow much cheaper than it was then, and that therefore it was reasonable to ask that the rate of interest should be reduced. I do not know whether, if the rate had gone the other way, my right hon. Friend would have asked us to revise the bargain from the 3½ per cent. upon which we had agreed to something which represented the rate of interest to-day.

It is clear, I think, that I am not on very strong grounds in asking the National Debt Commissioners to go back on the arrangements made with them because the rate of interest has moved in our favour since. Nevertheless, I think it is possible to say that nothing has been paid under the first arrangement and that the actual bargain has not begun to operate, and that, since the rate of interest now prevailing would not mean a loss to the National Debt Commissioners, I could ask them to reconsider the rate. I am prepared to do that, though not at the figure which my right hon. Friend put down, because it must be recognised that the figure of 3 per cent. is below the actual rate at which we are borrowing. My right hon. Friend said that the price of the 3 per cent. Funding Loan, the circumstances of which were not very different from the circumstances we are now considering, was just over 100. That is an error, for the price, I think, is now about 98.

Sir R. H ORNE

I said that to-day the price of the 3 per cent. Funding Loan, 1948–53, is 100¼.

Mr. CHAMBERLAIN

I have made inquiries, and I am told that it stands at 98 3/16.

Sir R. H ORNE

I am referring to the 3 per cent. Funding Loan, 1948–53.

Mr. CHAMBERLAIN

I am referring to the last loan. The fact is that the rate at which we can borrow to-day is represented by a figure of about 3⅛, and in dealing with the National Debt Commissioners, although some hon. Members credit me with a great deal of influence with them, I can only maintain that influence if I ask them to do things which are reasonable, since they have, as my right hon. Friend pointed out, their responsibilities to the depositors in the trustee savings banks. I am quite prepared to ask the National Debt Commissioners to revise the arrangement that has been made at 3½, and to substitute for that figure the current rate, which is 3⅛. That will go a very long way towards my right hon. Friend's request, and as far as I can go, because if I went below the current rate, that would mean a loss to the Exchequer and a new Financial Resolution.

What effect would that have upon the annual instalments? It has been pointed out correctly that the debt has now been reduced to somewhere in the neighbourhood of £106,000,000. Taking the instalments that are provided in the Bill, it would mean that the period of time it would take to repay the debt would be shorter, and it would come down to something like 34 or 35 years. Assuming that we leave it where it is, the reduction in the rate of interest would not make a very large difference in the amount of the annual instalments, but if we were to fix the instalments at a figure of, say, £5,000,000, or a reduction of £500,000 in the sum in the Bill, the debt would be repaid in about 37 years. But that would not be quite in accordance with the second of the three Amendments, which suggests that after a certain date the instalments should be reduced to £4,000,000. As was pointed out by my hon. Friend the Member for Stirling (Mr. J. Reid) this could not affect the Treasury, but it does affect the term over which these repayments would have to be spread, and I am advised that if the instalments were brought down to as low a figure as £4,000,000 it would be 55 years before the debt was repaid. It does not seem right to me that the debt should be spread over so long a period as that. As a matter of fact the difference of £1,000,000 in the annual instalments will not make a very great difference in what the Statutory Committee can recommend, and seeing that we do not know what circumstances may arise in the future I feel it would be improper to postpone the repayment of the debt for 55 years. I suggest, therefore, that we might reduce the instalments to £5,000,000 instead of £5,500,000 and that we should reduce the rate of interest to 3⅛ per cent., subject to the assent of the National Debt Commissioners. In going as far as that I have endeavoured very sincerely to try to meet the views of those who have backed this Amendment, and I hope they will feel that I have gone a very long way towards meeting them.

6.17 p.m.

Major HILLS

My right hon. Friend has not met the larger issue that lies behind this Amendment. The reduction of half a million a year in the instalments is something; but it does not meet the demand which exists in this House, and I believe in the country too, that the Exchequer shall bear more of this burden. The promise to reduce the rate of interest from 3½ to 3⅛ per cent. is, of course, a concession but I would point out to the Chancellor that it does not operate for several years. The contractual period lasts, I understand, until 1938, and until that period is over the concession in the rate of interest cannot come into effect. Am I not right in thinking that the reduction would not begin to operate until the contractual period is over?

Mr. CHAMBERLAIN

The contractual period is not a period which covers the whole debt but is a period which applies to each particular five years' certificates, and, therefore, the new rate of interest would begin to apply as soon as any certificates mature.

Major HILLS

I understand that as each five-year period expires fresh money will be borrowed at 3⅛ per cent. and that those five-year periods fall in at different times. I agree that that is a concession, but if I may respectfully say so, it does not go to what is the root of the demand that exists in this House and, I am sure, exists in the country. It does not meet the point made by my right hon. Friend the Member for Sparkbrook (Mr. Amery), for it does not meet the point of the insured man and his position in respect of uncovenanted benefit.

6.20 p.m.

Mr. A. BEVAN

On a point of Order. This Debate has now been going on almost for four hours, and the Members of the Opposition have not made any speeches at all, because we desire to speak on what hon. Members are all saying in their speeches that they desire to speak on, and that is the exemption of the fund from any debt at all. I suggest with every respect, Captain Bourne, that hon. Members have been out of order almost the whole of this evening. They are trying to make Second Reading speeches under a subterfuge. The Committee ought to get rid of these Amendments in order that we may discuss what hon. Members say they want to discuss, and I suggest, with all respect, that we are entitled to be protected from what is now developing into a Second Reading Debate on very narrow Amendments.

6.21 p.m.

Sir R. HORNE

I would like to assist the Committee in any difficulty which may be experienced. I listened with very great care to what the Chancellor of the Exchequer said, and I have consulted with some of my hon. Friends who are responsible for the Amendments on the Paper. On my own behalf and on theirs I wish to express our consideration to the Chancellor for the way he has met us. Personally, I feel indebted to him for the sympathy as well as the courtesy which he has shown to us. We are prepared to accept what the Chancellor has offered. If I might make a suggestion, we might, perhaps, deal with the first of the Amendments now, because I gather from the Chancellor's speech that he would accept that Amendment and have it incorporated in the Clause. I refer to the Amendment which reduces the sum from £5,500,000 to £5,000,000. I think we might deal with that at once. In the matter of interest, I gather that while he has said that he is himself in favour of reducing the rate of interest to 3⅛ per cent. he has, as a matter of ordinary routine, to deal with the National Debt Commissioners. I do not gather that there is likely to be any difficulty about it, and at any rate I am perfectly content, and so are my hon. Friends to rely on that idea being carried out, and that we may be able to insert 3⅛ instead of 3½ in the Clause upon Report stage. May I add that, as I suspected, my right hon. Friend and I were dealing with different securities in the controversy we had a few moments ago as to the rate of interest. I erroneously referred to the 3 Per Cent Funding Loan, which is yielding the rate of interest which my right hon. Friend said, but what I was really thinking of, though I incorrectly described it, was the 3 Per Cent. Conversion Loan, which is now standing at rather over par. But there are no more controversies now so far as this Amendment is concerned, and I do not seek to raise any more.

6.23 p.m.

Mr. A. BEVAN

Do we understand that the three Amendments in the name of the right hon. Gentleman and his friends are withdrawn? If there is no intention of withdrawing them I must persist in the point of Order which I raised, namely, that the Debate ought now to be strictly confined to the merits of the Amendments themselves, and that we shall have an opportunity to get on with the major issues.

The DEPUTY-CHAIRMAN (Captain Bourne)

I understand that this Amendment is to be accepted and that the right hon. Gentleman will not move the other two. In that case, I could then put the Question, "That the Clause stand part of the Bill." I cannot help thinking that that would be the best way of dealing with the matter.

Amendment agreed to.

The DEPUTY-CHAIRMAN

I understand the right hon. Gentleman does not desire to move the other two Amendments.

Sir R. HORNE

No.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

6.25 p.m.

Mr. LAWSON

In rising to speak against the Clause standing part of the Bill I should like to emphasise the point put by my hon. Friend the Member for Ebbw Vale (Mr. A. Bevan) that it is a remarkable thing about the Debate that hon. Members have been giving reasons not merely for the concession which the Chancellor has made but reasons against the principle that the fund shoulid accept responsibility for this debt. The debt has been laid upon the fund under the assumption that the people who are members of the fund are responsible for it, or that the insurance system is in some way directly responsible for the debt. When this Bill becomes an Act, if we accept responsibility for this debt, it will be laying upon the fund a burden which the wildest dreams of those versed in finance never conceived that it should bear. I was in the House when this fund started. There are not many Members here who were in the House at that time. It was a small, limited Insurance Fund, started in 1911. There was no conception at that time that it would have to meet such conditions as have prevailed since the War. It was one of the funds set up to meet the troubles of a limited number of craft organisations. There were about 2,000,000 members of the fund. It was not widely known outside those crafts, and it was not considered as anything more than a very meagre experiment to meet the limited unemployment of pre-war days. No one thought for a moment that it was likely to be used to meet an emergency like this.

After the War there were great masses—literally millions—of people who ceased work when the "Cease fire" went forth. A certain number were people who had never been in industry before, and it was a certainty that they would not remain in industry very long; but there were great masses of people unemployed, and there was a very strong spirit abroad. Men were returning from the War, and in many cases had no work. There were the munition workers. Those of us who were in the House at that time and were looking at the question from the centre of things could see, as the Government of the day saw, that there were all the possibilities of a very urgly situation. First of all the Government used what was known as the "out-of-work benefit," which was simply a payment out of Treasury funds for the purpose of keeping the people quiet. This continued for some time. Then the Government mobilised the Insurance Fund to meet this great emergency. I ask the Committee to note that it was a great new question, touching great masses of unemployed who were the product of the War and of the disorganisation of industry as the result of the War, and the Government had, in the first instance, simply to pay those people out of the Government's own coffers. The Government attempted to use this small and limited fund for the purpose, and it is not to be wondered at that there was a debt round about £20,000,000 in the first 12 months.

The first point I want to make is that it cannot be proved by the Chancellor or the Minister of Labour that this fund, which started as a sort of hand-to-mouth business, was at all meant to meet the problem that it was called upon to meet, or that it was founded for that purpose. Great masses of the people for whom the Government had recognised responsibility were put upon that fund, and it was called the Insurance Fund. Many of those people would have been surprised to know that they were insured. If the people who were plumped upon that fund had been told that they were getting the money as insurance, they would have been very much surprised. I am not so sure but that that was not the origin of the term "dole." The Government carried on for some time in those circumstances, and did their best to adapt this petty thing which was the nucleus of an insurance organisation, and which was not meant originally to meet the kind of exigency to which it was finally applied. So the Government, through the Ministers of Labour, tried to adapt it to the new problem. The right hon. Gentleman the present Minister of Labour was in the House at the time. It was like using a pint pot to bale out the sea, so to speak, and Ministers of Labour had to get up to all sorts of tactics—I should say that they had to use all kinds of tricks to make this organisation, which had been grabbed for the purpose, fit the needs.

So we get to what was called "un-covenanted benefit." Everybody knew what uncovenanted benefit was. It was the old payment to the unemployed under another name. There was a theoretical period of people being insured when the fund first began. Great masses were never insured, and Ministers were particularly asked to try to make this thing fit. There was the device that was called "the Minister's discretion." I do not know what happened to Ministers at the time when they were supposed to use their discretion. I should think that life was a general nightmare. The Minister of Labour knows something about that. Hon. Members who were here at that time will recall that the Ministers were constantly assailed upon various grounds connected with principles of insurance that were very shadowy indeed, if they existed, except that somebody really needed something and that his need had to be met. Ministers used to be bombarded every day for long periods with matters of that kind.

Uncovenanted benefit, Minister's discretion and all the rest of it, were only attempts to adapt this new machinery to something which it was never meant to meet, for the reason that there was a great new problem upon us which had scarcely any relation to the unemployed problem as it was in pre-War times; fundamentally it is the same, but it has been altered by the sweep of new powers and by the new forces that have come into operation. The Chancellor of the Exchequer has said that there came a time when the Government accepted responsibility. They tried to get proposals accepted, and, instead of having what were called transitional cases, the Government definitely tried the plan of 30 stamps, eight stamps, 30 stamps in two years, and 30 at any time. Various conditions were laid down. Ministers stood at the Treasury Box and proclaimed that one day we should get back to the old 6 per cent. of unemployment. I remember a Minister of Labour telling the House of Commons that all his figures were based upon an unemployment figure of 6 per cent. annually, and so he laid down the rule about the 30 stamps with various qualifications. The 6 per cent. turned out to be nearer three times that figure, for the simple reason that conditions, as conceived during the time when the Unemployment Insurance Act, 1911, was put into operation, had altogether been revolutionised because of the changed conditions in the world and of the new forces. That did not work at all either, so finally the Government of the day said, "We will accept direct responsibility for the people who are on transitional payments." The Chancellor of the Exchequer said : It may be said that the people who are on transitional payments might have been responsible for something like two-thirds. Members of the Royal Commission said that it was quite true——

Mr. CHAMBERLAIN

I said just the opposite.

Mr. LAWSON

I thought that the right hon. Gentleman was quoting. Members of the Royal Commission said, at any rate, that it was quite true that a great part of this debt——

Mr. CHAMBERLAIN

What I said was that two-thirds of the debt, at any rate, had been incurred by insurance benefit, and that as to the rest there was no data to say how much there was of transitional payment and how much of benefit.

Mr. LAWSON

That is the point. The Government were not in the position to say accurately for how much the transitional people were responsible, but they knew that they were responsible for some of the debt.

Mr. CHAMBERLAIN

Insurance benefit was responsible for two thirds of the debt.

Mr. LAWSON

That depends upon how you define "benefit." At one time benefit was defined in a much wider way than it is defined in the present Bill, The Government have come down to the 26 stamps and the possible 52 extension in regard to the 52 weeks. They want to make the fund solvent by laying upon it a mass of debt which is over £100,000,000—it ranges to £115,000,000, as a matter of fact. We say that the people who are on this fund are not responsible for the debt, which was incurred to meet a great national emergency and which was just as much a social insurance as is the interest that was paid to the people who lent money in time of war to secure us against the ravages of an enemy. After the War, the debt was incurred through simply buying off people who might otherwise have been difficult to deal with.

Everyone knows what were the sentiments and feelings that prevailed at that time. The soldiers had been told that they were fighting for a world fit for heroes to live in, and they had been encouraged by every possible means to give the best of their services. The great mass of the soldiers returned and found that there was no work for them. The money was used, some of it out of the original fund, for the purpose of keeping those people quiet. It was a social insurance. It was buying off people who might have made trouble. In no sense could it be said that it was a debt incurred by the people who are now members of the Insurance Fund. On all grounds—from the origin of this debt onwards; in all its practice; with the various attempts and the various subterfuges that the State has made in order to try to apply the Insurance Fund to a new set of conditions; on any grounds you like, this £100,000,000 should not be laid upon the people who are members of the fund. It will be very unjust if that is done, and we say that the State ought to take responsibility for this money. The right hon. Gentleman gave us a hint during his speech, and I wondered whether he meant that we could not expect unemployment to continue to fall in the future at the same rate as it is at present. I shall read over to-morrow with very great interest what he said, because I think it was a very significant passage.

We have been talking about the possibility of reducing the contributions, but I am not one of those who ever accepted the theory that unemployment contributions are a real burden upon industry. If they were a burden upon industry to anything like the extent that they are said to be, America should have been in a very healthy condition now. We have not only had unemployment insurance, but health insurance, and various other responsibilities for social services; but America, without these things, does not seem to be as active and prosperous as one would think she should be from some of the arguments that are put forward. It is very desirable, of course, that in the future contributions should be reduced if possible, but one of the first things to be done—and the Bill makes it clear—is that the fund has to be kept solvent. If the fund is to be kept solvent in the future, can it afford to pay the £5,000,000 which the right hon. Gentleman suggests will be the limit in four years' time, or at any rate within a certain number of years? At the best, what he has accepted is that the interest to be paid on the debt will be limited now to £5,000,000 a year, and the question is, can the fund, if it is to be solvent and if it is to do all the things that are expected of it, afford to continue paying that £5,000,000 a year?

It may be that at the present time we are really in something like a boom. Do not let the Committee be under any illusion about this. The real fact is that practically every other country in the world is sharing in this improvement in trade, as is shown by the figures of the International Labour Office. The question is, is employment going to remain as it is, or is it going to improve? We hope that it is going to improve, but in these days of disturbed trade, when even the most accurate and mathematically minded economists are very chary about making prophecies, are we not likely, if this fund has to pay £5,000,000 of interest annually, to place it in a position in which in future years the contributions might even have to be increased in order to meet the needs and keep the fund solvent? We say that it would be good business, from the point of view of a solvent fund, to cancel this debt and relieve the fund of this £5,000,000 a year interest, in order that the fund might be put in a more substantial condition as regards increased benefits or reduced contributions, or so that, at any rate, if bad years come in the future, it would stand the test much better than it will even from the point of view of the fathers of this particular scheme.

We do not, however, believe in the division of the unemployed into two sections. The Minister of Labour in this Bill extends the period from 26 weeks to 52 weeks under certain conditions, and, if the debt were abolished, it might give a greater chance in the future of enlarging that period, so that the great mass of the unemployed who are on transitional payments might be in a better position than at present, and might have a longer period of benefit. But the present Government have been in the position of making presents, under the name of subsidies and other names, to various people from whom they hope to gain support—millions of money which, when they are totalled up, much exceed the relief for which we are asking on behalf of the Unemployment Insurance Fund. I am certain that, from the point of view of the conditions under which the debt was incurred, from the point of view of a solvent fund, and from the point of view of justice to the unemployed people who are on the fund, it would not only be good business, but would place the fund in a position to do much better things than it can do at the present time, if this relief were given. The right hon. Gentleman does not agree; his preliminary speech was an answer to our speeches against this Clause. It does not look as though he were going to agree, and I should be very much surprised if he did. The Government have a theory that if you help the prosperous you make everybody else prosperous : Whosoever hath, to him shall be given. It is a good principle for business, it is a good principle for national life, to build up those whose conditions are already fairly substantial, and to give, if you are giving at all, in fractions to those who are in want. I dare say the right hon. Gentleman thinks that he is as human as anyone else in the House, and he is. He is just as kindly personally as anyone that there is, either in the House or outside it. But the right hon. Gentleman stands for a principle, a view of society, in which he firmly holds that it is necessary to relieve and fortify financially those who are best off. I am sure that if he could have a proper appreciation of the needs of the great masses of people who are on transitional payments or on benefit—if he could know the lives of those people, their struggles, their efforts to live decently—if he could see how from morning until night those people, with just as exalted views of life as himself and the best Members here, who struggle to maintain not only their character and their integrity but their homes—I am sure that if he considered all these things, the right hon. Gentleman would think it a very meagre gift to accept the responsibility for this £115,000,000 of debt in order that in future he might possibly include a whole lot of people who are now outside the benefit system, and in order that he might improve the position of those who are on benefit. I am not permitted to argue the wider question on this Clause, but, if unemployment insurance is to be made watertight, if it is to be built on a sound foundation, if it is to give decent returns to the people when they are unemployed, if it is to enlarge its boundaries as far as possible so as to include a great many people who are on transitional payments and outside transitional payments at the present time, the right hon. Gentleman and the Government will have to do what is decent and just. If they did that, they would accept responsibility for the whole of this debt. We shall vote against the Clause because we think that it is not only uneconomic but unjust to those who are members of the fund.

6.57 p.m.

Major HILLS

The hon. Member for Chester-le-Street (Mr. Lawson) has traversed such a wide field that I hope he will forgive me if I do not attempt to follow him. I will only say that I do not agree with him. I think he is unfair to the Chancellor; I think he might have looked more to the value of these concessions; and, although I want the Chancellor to go further, the hon. Member was not right in saying that he is giving to those who have, nor was he right, in my judgment, in saying that insurance contributions are not a tax on industry. I think they are a heavy tax, and the worst form of tax, because they increase as an employer does his duty and employs more labour. At any rate, whether they are a tax on industry or not, they are a tax on the workman, and a very heavy tax, too.

The Chancellor told us with great force that, although there were convictions in the minds of those who wanted an increased contribution from the Exchequer to the Unemployment Insurance Fund, he had equal convictions on his side, and more information, and he had to consider the position of the taxpayer. All those things I admit, but the contributor to the Unemployment Insurance Fund is also a taxpayer, and he has suffered a cut, or rather, an increased payment, which is the equivalent of a cut. He pays a tax which is very onerous, and I think that, as between the employer, the workman and the general taxpayer, by far the strongest claim is in favour of the employer and the workman, and that a, lowering of contributions would be more just and more useful than the infinitesimal effect that would be caused to the taxpayer. I wish to give credit to the Chancellor for all that he has done. I quite recognise that he has made some concessions. In the first place, the decrease of £500,000 in the yearly contribution will especially affect those members of the fund whose contributions were increased in 1931. I take it that a great many of them are the same people, and they may see the time when their contributions are decreased to the old figure, or come rather nearer to it. To that extent, therefore, the Chancellor has helped the people who bore the burden in 1931. Then he has given a concession of ⅜ths per cent. interest on all those blocks of the debt which fall in and can be reborrowed. Lastly, he has pointed out to the Committee that the present Bill might have followed the reform suggested by the Royal Commission in paragraph 677 of their report and might have placed the Exchequer's contribution on a lower level than that of the workers or employers.

I would, however, point out that the first concession, the £500,000, is no burden on the Treasury. It merely means that the term of repayment is increased. The three-eighths per cent. is no burden on the Treasury. The Chancellor is satisfied that he can reborrow the money at that rate, and the Exchequer, therefore, will not suffer. These concessions, therefore, do not affect the Exchequer, and the only one that does is the possible claim that the Exchequer might have reduced their contributions below the level of that of the employers or the men. Against that you have the general feeling that it is the duty of the Exchequer—and of the taxpayer, who stands behind the Exchequer—to help the Unemployment Fund out of the rut and to help those people who contribute to it. The Royal Commission went as far as to suggest that the Exchequer should take two-thirds of the burden. My right hon. Friend the Member for Hill-head (Sir R. Horne), in his speech on the Budget, only suggested that the Chancellor should devote his realised surplus of £31,000,000 to that object instead of to the repayment of debt, and I ventured to make the same suggestion myself. I beg the Chancellor to consider the strong feeling that exists, among his own supporters and in the country, that a claim of that sort is a just claim and ought to be met by the Government. I do not ask that he should go as far as the Royal Commission suggested, but I do think that to remit one-third, or thereabouts, of the present debt of the fund would be common justice to those who are in the fund and contribute to it. It would also be in consonance with the opinion of many hon. Members of this House and with a large body of opinion outside.

I do not want to enter into a dispute about figures. It is quite easy to argue one way or the other as to how this debt was incurred. Does not the Chancellor see, however, that he is acting as though the Exchequer had no responsibility at all for any part of the £106,000,000? He is charging the whole on the fund; for his concession of £500,000 off the instalments, and a reduction of the interest does not meet the point that he leaves the whole of the £106,000,000 on the fund. That is where I join issue. It ought not to be on the fund, and it is entirely wrong that it should be on the fund. However you may juggle with the figures, there must be some liability on the Exchequer—for extended benefit, or uncovenanted benefit, or transitional benefit, or whatever name you like to give to it. The Chancellor admits no liability whatever. He is giving a chance to the present people on the fund of a reduction of their contributions, but he leaves on the fund and on its members of the future the burden of repaying the whole of the debt. On that point the Royal Commission were purposely explicit. They said : It would not be equitable for employers and workmen to contribute equally with the Exchequer. That is, I believe, the opinion of the right hon. Member for Hillhead, who does not speak rashly or without thought, and I believe it is the opinion of the majority of hon. Members of this House.

The Chancellor had a most successful launching for his Budget. It was well received in this House and in the country. I confess, however, that it would have been rounded off, and the social side of it would have been further weighted, if he had done something to repay the capital liability on the fund. I should have liked to see him do it in a dramatic manner by taking up and handing over his realised surplus. I believe that Governments sometimes do not appreciate how much people are ruled by emotion and imagination. He has not done that, but let him consider whether he cannot take part of this debt on to the Exchequer. It is a debt which the State ought to incur and did incur. It is a payment which the State should make for the fund supported people who would otherwise have come upon the Exchequer. For all those reasons I hope my right hon. Friend has not said the last word. I know that he wants to protect the taxpayer and to do what is fair by all the different people whose salaries were cut, and whose positions were worsened in 1931. Is he not leaving out the present contributors to the fund? I do not appreciate the distinction that he made between the cut and an increase of contribution. Surely they are the same, and surely these people have to pay that contribution even now.

7.8 p.m.

Mr. A. BEVAN

I wish first of all to congratulate the Chancellor of the Exchequer upon his proper estimate of the real substance in the rebellion which was blowing up this afternoon. All the speeches to which we have listened from the Government Benches were speeches against the debt itself. There was no substance in most of the speech of the right hon. Member the Member for Hill-head (Sir R. Horne), or in that of the right hon. Gentleman the Member for the Sparkbrook Division of Birmingham (Mr. Amery), except a root-and-branch objection to the fund starting off with a debt at all. It may be clear to the Committee that the Amendments which were on the Order Paper were not the Amendments that these hon. Gentlemen would have liked to put there, but may have been subterfuges adopted in order to press the Chancellor of the Exchequer to take the entire substance of the debt.

Mr. AMERY

And yet keep in order.

Mr. BEVAN

Now the Chancellor of the Exchequer has taken away that excuse, but the Clause is still here. There was no need for the Amendments at all to enable the right hon. Gentleman to give effect to their desires; they can walk into the Lobby this evening and vote against the Clause. What, therefore, was there in the speeches we heard? Pure and unadulterated hypocrisy. All that the Chancellor of the Exchequer has done is to give the unemployed something which costs him nothing and which has the effect of reducing the annual burden on the fund by £500,000 a year, a suggestion which was made to the Chancellor of the Exchequer from these benches when the Financial Resolution was before the Committee. There is nothing new in what the right hon. Member for Hillhead said to-day, although I admit that he said it with great charm, grace and lucidity. The suggestion was made in the earliest stages of the Bill that the money could be borrowed at far lower rates of interest than those which were charged, and that it was possible now to convert the debt to a lower rate of interest. I myself made the suggestion to the Chancellor that such a conversion was not only expedient but was also desirable and fair to this fund. Now, after all these months, the House is packed with Conservative Members listening to portentous and pretentious speeches from the benches opposite asking that this be done. The Chancellor, who knows his supporters by now, gets up and gracefully says he will do it, and £500,000 is saved to the fund, a result with which he is very pleased.

If, however, right hon. and hon Members were sincere when they said that they wanted not merely to secure these Amendments but also to abolish the fund root and branch, why are they not on these benches now, making their speeches? Why will they not go into the Lobby this evening and vote against the Clause itself? No wonder the country loses its faith and confidence in men who get up in this Chamber and speak in that way. It is not fair to the Committee, it is not fair to the country, that they should hang on to such narrow Amendments and such wide considerations and then run away from them afterwards when they have the opportunity of squaring up. The position which we take up is a very simple one. I do not wish to go into the general argument between insurable and uninsurable benefit, because, quite frankly, my simple education has never enabled me to understand it—unless the distinction is made to give the right hon. Member for Spark-brook an opportunity of insulting the unemployed by referring to those who are on insurable benefit as the cream of the working men.

Mr. AMERY

The hon. Member entirely misunderstood me. I said that in other trades the men who have been in employment throughout are naturally the best of the workers. I agree that there are trades in which the best of the workers have been unemployed for years, but on the whole, in those trades, those who are in employment are the best of the workers.

Mr. BEVAN

What the right hon. Gentleman says is a direct confirmation of what I am telling him. He says that those who continue in employment are the cream of the workpeople. I entirely and emphatically repudiate that suggestion. In many of the larger distressed areas the best of the workpeople are out of work. This division, this distinction which has been wrongly drawn between insured and uninsured is merely la device to enable people to get up in this House and refer to a certain class of unemployed man as an undesirable citizen. The right hon. Gentleman himself did it to-day.

Mr. AMERY

I did nothing of the sort.

Mr. BEVAN

I do not wish to misrepresent anyone, but there can be no other way of interpreting the statement that those who are in employment regularly are the cream of the workpeople and are more desirable citizens than those who are unemployed. Am I unfair in assuming that?

Mr. MOLSON

Yes. I cannot remember exactly what my right hon. Friend's words were. I do not know why I should be intervening except that the hon. Member pointed to me.

Mr. BEVAN

The hon. Member was in disagreement with me. That is why I am referring to him. I say I am correctly interpreting the right hon. Gentleman, and I am pointing out that that is one of the consequences of drawing this purely artificial distinction between insurable and uninsurable people. Indeed, I am satisfied it is one of the reasons, apart from that of saving money at the expense of the unemployed, why the distinction is persisted in. I emphatically repudiate the suggestion that those who have been idle the longest are necessarily, because of that, less desirable than those who are in continuous employment. In the mining industry, where there are 280,000 out of work, and in the textile and ship-building trades men are unemployed through conditions over which they have not the slightest control, and it is monstrous that men in these circumstances should have the least taint attached to them. It is one of the consequences of this purely artificial classification of the unemployed.

Why is there a debt on the Unemployment Fund? It is very largely a consequence of the fact that there never has been an insurance scheme at all. The scheme has always been based upon far too narrow a segment of British industry, and indeed it has been based upon those industries which are most exposed to the shock of world competition. It is just where competition hits hardest, in the basic trades, depending as we are on world trade and depending upon the general prosperity of the country, that unemployment has been most acute since the War. Unemployment insurance contributions are in substance derived from those industries. The fund would have been actuarially solvent all the way through if, instead of having been industrial insurance, it had been social insurance, as it ought to have been. That is why we protest against these distinctions all the time. We say that all the citizens of the nation have benefited by maintaining their employment, and, therefore, all the citizens of the country ought to contribute. Instead of that, by having the Insurance Fund so narrow as to render it actuarially insolvent whenever economic distress begins, you place the maintenance of unemployed people upon unemployed people, or on those areas where unemployment is most acute.

The Chancellor of the Exchequer made the astonishing suggestion that the fund is in debt because high benefits were paid. Of course, if we did not have any benefits at all, you would not have any debt. If you kept on lowering the benefits you would wipe the debt out. You would wipe the men out too, but that does not matter. The debt is there because of this attitude towards insurance. You sacrifice the unemployed man to some mysterious actuarial god to which this House is always offering up libations—some extraordinary principle of actuarial and financial solvency which must be preserved at all costs. Unless you do it, the whole of society will be shaken to its foundations.

Sir FRANCIS FREMANTLE

As happened in 1931.

Mr. BEVAN

I am counting 1931. The hon. Gentleman need not be afraid. In 1931 the suggestion was made, I think by Sir Richard Hopkins—and it was the beginning of the whole crisis—that perpetual borrowings by the fund, which obviously could not repay them, was an unmistakable sign of an unbalanced Budget. The Chancellor's Budget is balanced, but the debt is there. According to that statement, no debt could be accumulated, but the annual outgoings should be met by the annual income. Is it being met? The fund still owes. £106,000,000. When we were bringing Motions for loans before the House of Commons, it was argued on more than one occasion that those loans ought not to be incurred. They ought to be chargeable to the annual Budget, if the Chancellor had the courage to raise money for the purpose. The Chancellor is not wiping out the £106,000,000 on the annual Budget. He is carrying it as a loan. What is his getaway from that? It is that the Unemployment Insurance Fund will be able to pay it back in 37 years. How does he know? He cannot tell. As a matter of fact, he cannot tell what is going to happen to the fund next year. That is why he was so guarded to-day. He introduced into his speech a very mysterious sentence. He said, "Of course, there is information available to me which I cannot give to the House of Commons." What does he mean by that? He means, obviously, that what is happening to the Insurance Fund is that it is suffering from a surfeit of riches. It has too much money.

If you took this £5,000,000 away, what would the Statutory Advisory Committee do? It would be embarrassed by the £5,000,000. That is the suggestion. It would do something silly, because the industrial outlook is by no means settled. If they had this additional £5,000,000, they might reduce the contributions or they might increase benefits. If they reduced contributions without increasing benefits, there would be a great hue and cry, because people would regard it as monstrous, while you are still paying only 2s. a week for a child, to use the surplus to reduce contributions. If, on the other hand, they used the £5,000,000 for the purpose of increasing the rates of benefit, Unemployment Insurance benefit would be higher than agricultural wages in many parts of the country. So that to give this £5,000,000 to the Unemployment Insurance Fund to handle would be very undesirable from the Chancellor's point of view. If you used it to raise the scale of benefits or to reduce contributions, and unemployment increased next year, you might have to raise the contributions again or reduce the benefits, and, though a committee might be exceedingly popular when it increased benefits or reduced contributions, it would soon lose its popularity if it had to increase contributions and reduce benefits again. So that what the Chancellor is attempting to do by resisting our arguments is to prevent the Statutory Advisory Committee from having a sum of money at its disposal which it might use in a way which would be an embarrassment to the Government in the future.

The Financial Secretary to the Treasury will not answer that case by getting up and giving us a few more mysterious lessons upon the wisdom of orthodox finance. We want to know whether it would not be far better for the Unemployment Insurance Fund to start off now with no debt at all. If you believe that you have a good scheme, start it off under the best auspices. Let them use the £5,000,000, if they wish, to reduce contributions, although I am satisfied that any decent meeting of workpeople, if they had the question put to them, "Are you in favour of reducing contributions or abolishing the means test?" would vote for the abolition of the means test. There is no desire on the part of workpeople to have a reduction in contributions at this moment at the expense of keeping their comrades on the means test.

Mr. CURRY

Will the hon. Member explain how the contributions affect the means test? I understand that there is no means test on the insured population who draw in respect of contributions.

Mr. BEVAN

It is perfectly easy to answer the hon. Member. Under this Bill a certain number of people are taken off the means test by the extension of statutory benefit from 26 to 52 weeks, under which the Chancellor gets a present of £6,000,000. He could easily use the £6,000,000 to increase the 52 weeks to 100. That would take more men off transitional payment and put them on to Unemployment Insurance benefit. It would, at the same time, put an additional sum of money into the Chancellor's hands, because he would no longer have to find the money for those men from the Budget, and he could use it to abolish the means test for those who would still be on it. That is exactly what he has done under the Bill. He has increased the number of weeks during which men may receive statutory benefit from 26 to 52. That means that he is taking them off the Budget and putting them on the fund. At the same time he takes them off the means test and puts them on to Unemployment Insurance benefit. He uses that £8,500,000, the surplus now of the fund, and saves the Chancellor of the Exchequer £6,000,000, which he is paying out in transitional payments to those men. If he extended insurance benefit by using up £5,000,000, he would take more men off the means test and put them on to the fund. At the same time he would have an additional sum of money at disposal to make the conditions of those on the means test more favourable. So that in point of fact the Chancellor of the Exchequer, by using his £5,000,000 to liquidate debt, is using it in such a way as to prevent the Unemployment Insurance Statutory Committee from coming to the assistance both of the unemployed men and of the Chancellor of the Exchequer, and therefore I suggest that, if you put the question to any meeting of workpeople, they would not accept a reduction of contributions until justice had been done to all the unemployed people.

But that does not end the story by any means. Even suppose the Committee would not hold the view that the surplus should be devoted to a reduction of the number on the means test or to an increase in benefits, a reduction of contributions would be of some importance. I am not putting this forward as the first case, but merely assuming that the other devices have not been resorted to and that a reduction of, contributions would bring some relief to those industries which are already distressed. It is insufficiently appreciated that the industries which contribute the larger proportion of the Unemployment Insurance Fund are those which have been depressed since 1921—coal mining, the textile industry, shipbuilding and engineering. A reduction of the rate of contributions would be a relief to those industries which at the moment need it most. It is nonsense for the Chancellor of the Exchequer to talk as though there was no difference between a reduction in Income Tax and a reduction in insurance contributions. The incidence is different. A wise Chancellor of the Exchequer at the moment would be more interested in taking the burden off distressed trades than in reducing the Income Tax.

Those are some of the considerations which have influenced my hon. Friends and me in opposing the proposal now before the Committee. We think that it is callous and unstatesmanlike and the giving of assistance where assistance is least required and withholding it where it is most required. We shall vote against the Clause, and we are satisfied that opinion in the country will support us. It is monstrous in these circumstances that the moneylender should be preferred to the unemployed. If the debt is to be carried, it ought to be carried as part of the general debt of the country and not imposed upon a fund already far too much circumscribed by the nature of our legislation, so placing burdens upon industry which industry cannot afford to carry at the moment, and which may prevent the Statutory Committee from raising children's allowances and giving all those other improvements which informed opinion in Great Britain is satisfied ought to be brought about at the earliest opportunity.

7.35 p.m.

Mr. CURRY

I apologise to the hon. Member for Ebbw Vale (Mr. A. Bevan) for interrupting his speech, but I was anxious that he should develop for my benefit the point which he was trying to make, which was, that the insured workers themselves would prefer a continuation of benefits along the present lines, with an extension of the period of covenanted benefit, than a diminution of contributions at the present time. I think that such an opinion coming from the hon. Member should be seriously weighed by the Government and by the Committee which will in due course review the finances of the fund. During the Committee stage of the Bill a great deal of dissatisfaction has been expressed in different quarters at the working of the Guillotine, and we are obliged to the Government for recommitting the present Clause. The Debate which has taken place to-day is ample justification of the wisdom of the action which the Government have taken, but it cannot help but give rise in the minds of many of us to what might have happened if equally important Clauses which were passed without any discussion could have been recommitted. The dissatisfaction and misgiving which is bound to exist with regard to the operation of this Bill is not allayed by the failure of the Government to recommit the whole of the Clauses which escaped discussion altogether.

Perhaps the most striking thing about the discussions on the Bill is the way in which public opinion has changed as the discussions have been prolonged. I remember that on the Second Reading, when I raised this very point about the debt and referred to the iniquity of commencing this scheme, I was greeted by all sorts of opposition from the benches opposite. We were told from the Front Bench that it was a Liberal principle to repay debt, and were asked how we would propose that this debt should be repaid. We find to-night that the desire to rid this fund of debt comes in very large measure from those sections of the House who were most anxious to support the Bill in its entirety when it was first introduced.

One cannot help but take stock of the position. Some of us who regard it as a mistake to place this debt upon the fund when we are starting off with a new scheme of this sort cannot possibly be satisfied with what the House has been pleased to refer to as the concessions of the Chancellor of the Exchequer. If the statement of the Chancellor of the Exchequer is properly examined there is really nothing in the nature of a concession by the Treasury to this fund. The concessions will not mean an extra charge upon the Revenue, and they will not place any burden upon public funds, and therefore they are not, properly speaking, concessions at all. The Chancellor has promised to see the Commissioners with a view to reducing the normal rate of interest, and the annual payment of £5,500,000 is to be reduced to £5,000,000, but that does not alter the relationship between the Treasury and the Unemployment Insurance Fund. It only prolongs the period during which the employed people of the future will be forced to pay for the unemployment of the past. That is all that it does. No concession will be of any value so long as no Amendment is made to the proviso in Clause 19 which gives the committee power to repay in excess of the amount stated in the Bill. The Financial Secretary, I think, will agree that the amount stated in the Bill is the minimum amount which it is being made obligatory upon the Insurance Committee to repay to the Treasury. It says that : provided that nothing in this Sub-section shall be construed as preventing the application, … of sums out of the fund towards the discharge of the said liabilities in addition to the instalments therein mentioned. Therefore, the concession which has been announced from that Bench this afternoon simply means that the minimum amount has been reduced nominally, but the freedom of the committee to apply a surplus in quicker and speedier redemption of debt is not abated in any way, and we may find, if a surplus follows—we are told this afternoon that in all probability it will follow—that a larger amount than £5,000,000 can be applied on the recommendation of the Commission. That is our objection to the Clause. It is not merely that we are starting off a new scheme with an old debt, but we are giving to the committee complete power, without any effective Parliamentary control, to deal with the finances of the fund.

That brings me to the real principle which is involved. Surely, if we start a scheme of this sort, even those of us who have opposed this Bill from its inception would desire nothing but good to come out of it. If the Bill works as its supporters hope and believe it will work, no one will be more delighted to see it working well than many of us who have opposed it on the Floor of the House. Certainly that is my opinion. I should be very glad afterwards to have all my fears removed by the actual experience of the working of the Bill. But if we look at the effects which may follow from the introduction and the enactment of this Clause, in relation to what may follow in the administration of Part II of the Bill, there is the possibility, if Part II is worked as its supporters believe it will be worked, generously, efficiently and humanely by the Public Assistance Board, while at the same time under Part I of the Bill you have heavy contributions being paid by insured workers for benefits which appear to be inadequate, that we shall be placing in jeopardy the whole principle of insurance. Either Part II of the Bill is going to place in jeopardy the continuation of civil peace in this country, or it is going to kill, by its experience, the principle of insurance. There is great ground in the contention of the hon. Gentleman the Member for Ebbw Vale that the public generally fail to appreciate the difference between unemployment benefits drawn from insurance and unemployment benefits drawn from the State. The higher the contribution, the sooner will the principle of insurance be questioned by public opinion. A contribution levied in this way is a direct tax upon industry, and it is also a direct tax upon employment itself. Therefore, the more onerous the tax, the more quickly will the notion grow that insurance is hardly worth while, and that you had better transfer this insured population to the Public Assistance Board and be done with it.

This high contribution has the effect, too, not only of penalising industry in its competition with the industry of the world, but it has a direct detrimental effect in bringing into employment the juvenile population of this country. I had a personal experience of that a week or two ago in interviewing some boys who were required for temporary occupations, I found that more than one of those boys had been engaged in some sort of work until they became old enough to have an insurance card, and that then they had lost their employment. The lower you can get your contribution the less will that reluctance to continue juveniles in employment remain.

So, on all grounds, I think the Government should have paid more heed to its own supporters this afternoon. After all, this Bill is really a great attempt by the Government to deal with the most difficult of all our social problems. One would have thought that a Government that was making such a vast attempt would have had sufficient affection for its child to start it off free of debt. Looked at from every point of view, from the point of view of the finances of the country, from the point of view of maintaining in our State the principle of social insurance, from the point of view of relieving industry from a burden which is onerous at a time when industry is carrying more burdens than it should bear, the Government might have yielded to the general feeling of the House and of the community, and might have relieved this particular fund from this particular debt in order that the time maybe expedited when either industry can be relieved of its burdens or the insured unemployed get greater benfits in the period of their distress.

7.48 p.m.

Mr. BAILEY

I have listened with the greatest interest to the arguments of the hon. Member who has just spoken. He suggested that the Government should take this burden upon their shoulders in order that the beneficiaries of the Unemployment Fund might be more satisfied with the benefit they receive. When we consider the facts, what is there in that argument? On the present rate of benefit, making no allowance for future increase, in 26 weeks an unemployed man is receiving the equivalent of his contributions for 19 years. What other insurance in the world of a private character offers its beneficiaries terms half as generous as those? Therefore, I say that the mere taking away of this debt from the Unemployment Fund to the National Exchequer is not desirable. I am sure that those who are not now satisfied with what they get will be no more satisfied with what they will be likely to get. There are always those who think that insurance is a wicked thing, and that if you cannot work you should be paid as much as you would receive if you were at work. Those who believe that should be frank and say so : they should say that they do not believe in the insurance principle at all. But I am sure that you will never get anyone to like this scheme as an insurance scheme if they do not like it now when they are receiving the equivalent of 19 years' payments in 26 weeks' benefit. In dragging this subject into the mire of political controversy we obscure how generously people are treated here in comparison with the people of other countries. While we may be gaining a little political advantage we are doing a great deal of harm to the character of the people.

Mr. CURRY

I would remind the hon. Member that this matter was introduced by the right hon. Member for Hillhead (Sir R. Horne) this afternoon.

Mr. BAILEY

I am not suggesting that even the right hon. Member for Hillhead (Sir R. Horne) is always without spot. I am sure he was on this occasion. It is a question of how an argument is put, and I was dealing with the argument of the hon. Member. I listened with the greatest interest to the speeches by the hon. Member for Chester-le-Street (Mr. Lawson) and the hon. Member for Ebbw Vale (Mr. A. Bevan). Both of them used the words "callous," "meanness," and almost every other form of abuse that a wide vocabulary can contain in the case of the hon. Member for Ebbw Vale. Does anyone think that if the Government were to concede everything that the hon. Member for Ebbw Vale is demanding his abuse would be any less intense? He accused those who spoke from the Government Benches of unadulterated hypocrisy. I could not help recalling the words in the Old Book : "He that is without sin among you, let him first cast a stone."

I cannot help thinking that these criticisms against the Government are purely Opposition criticisms. They are certainly not criticisms borne out by the facts. Here are the Government, which they accuse of being mean, able to restore the cuts which were imposed because of the lamentable inefficiency of the Government that the two hon. Members supported. That is a fact which we should try to drive home to the country more than we do. We have no need to be ashamed of this Bill on the ground of lack of generosity. We have every reason to say that it compares most favourably with what the Socialist party were able to do. At any rate we are restoring some of the things that they compelled to be put upon the very people of whom they now claim to be the servants. It makes me almost boil with indignation when I hear the hon. Member for Ebbw Vale talking about the large things he would do if he got into office, and of our meanness, for I think of what he and his friends did, and what they will do again if they get an opportunity, for the unemployed and the rest of us. It ill becomes the hon. Member to accuse anyone of unadulterated hypocrisy.

It is a very striking thing that the cautious finance in this as in other matters which the Chancellor of the Exchequer has pursued, criticised though that finance has been on the ground of meanness, has enabled him to be the one Chancellor of the Exchequer in the world to hand out benefits when everyone else has to impose burdens and increase taxes. There were two or three specific points that were given us in the speeches to which I have referred. First, it was asked why this money should be handed over to the unemployment committee. That only struck me as an additional reason for supporting the wise action of the Chancellor. It was said that the Chancellor was most unfair, that there should be no distinction between an insurable person and the person who is not insurable, that they should all be treated the same way. It is very easy indeed to make general observations of that kind and to suggest that those who do not agree with you are casting an aspersion upon the uninsurable worker. Of course, that is far from the truth. We all know that even in the Labour party there are different stars, each shining according to his own magnitude, and to suggest that one star shines rather less brightly than another would not be casting any aspersion at all.

It is true that as a general principle those who have justified the receipt of benefit on the ground of insurance should have preferential treatment over those who come as recipients of charity. I represent a division in which there are as many unemployed as there are anywhere in England, and I am sure that one of the greatest criticisms they have against the treatment of the unemployed by successive Governments is that there is a failure to distinguish between the man who has been out of work perhaps all the time, and the man who has suddenly fallen on evil days. Among working people themselves there is a general recognition that distinction should be drawn between the person in insurable benefit and the person receiving un-covenanted benefit. Any small increment that can be obtained is very much better kept where it is.

Another criticism was that the Government were holding back this money because they did not want too many gifts to be given at once, that if the trade of this country should not go on as brightly as it is going now and there should be a relapse, they would have to come to the rescue. I do not know whether that is true, but if it is true surely the attitude of the Government is reasonable. Surely, it is a good deal better that they should keep some reserve with which to come to the assistance of this fund, if assistance is necessary, than that they should begin now a standard of benefit that they might not be able to maintain in the future. The whole matter seems to be this In the old days in politics it was an offence to bribe with other people's money, politically at any rate, but you were allowed to do it to an unlimited extent with your own. Now it is a very grave offence to use your own money to gain a vote, but as long as you are using only other people's money you are justified in your action. I cannot help feeling that it is going to be very bad for our country if we are to divide ourselves into two sections who are prepared to give the most irrespective of the justice of giving.

When I take this Bill as a whole, and particularly this part of it, while there are portions which individual taste might reject, it is a very much better contribution to putting this thing on a permanent basis and a more generous basis, than that which the Labour party could possibly have done, carrying on the affairs of the country as they were doing. It is very unfair on every little point to criticise and to make party capital about what is, after all, a great attempt on the part of the Government to settle a question which deals with the fortunes of the most unfortunate part of our population, and an attempt to deal with it upon a non-party basis.

7.59 p.m.

Mr. BANFIELD

I must express my astonishment at the speech to which we have just listened. The hon. Member for Gorton (Mr. Bailey), who represents an almost purely working-class constituency, says that he has a very considerable number of unemployed in his constituency. He has come here and has made a speech which would be repudiated by three out of four of the Conservative Members of the House. If the hon. Member would only go to his own constituency and repeat that speech, his constituents would at the very first opportunity venture a verdict on him which he would not desire. We have heard a lot of rather stupid arguments, if I may say so, such as that if a man becomes unemployed and draws 26 weeks' benefit, he receives back something like 90 years' contributions. I have had considerable experience in paying out trade union benefit, and I know that the man who has no reason to draw trade union benefit is the happy man; he is the man who is pleased and proud to pay his contributions, so as to enable his less fortunate brother to draw out considerably more than he has paid in or can ever hope to pay in. As a matter of fact, that must be the basis of an insurance scheme.

We have heard it said too that unemployment benefit is positively harmful to those who receive it. I agree that when a man has been unemployed for a year, two years, or three years, as men have been in my constituency, it is harmful to the man, to his wife, and to his family, but it is no disgrace to the man, nor is it a stain upon his character. It is more an indictment of our present state of society, which refuses to enable a man who is willing to work to get work. This Clause places this great debt upon the Insurance-Fund, and I think it is admitted by everyone that the debt was incurred simply because the scheme in itself was not sound, because people were in need, because the Government felt that they must take some responsibility for them, because public opinion, in short, would not allow men and women to starve. It is absolutely true that the money that was paid out was paid out in the interests of the nation as a whole, and hon. Members know as well as I do that had it not been paid out, a far more serious state of things might have occurred in this country among working people than has occurred up to now.

I am convinced that as this money was paid out in the interests of the nation, the present debt on the fund should have been made a national charge. You are placing a burden on the fund for 37 or 40 years, and even the intelligence of the present Government Front Bench is unable to look forward 40 years and calculate that in that time nothing will happen to stop the payment of £5,000,000 a year out of the fund, and the fund still remain solvent. Everyone knows that the present condition of trade is not such as to make all of us look with confidence over even the next 10 years. It may be that the fund itself, in a comparatively short time, instead of showing a surplus may again show a deficiency, and if it is really intended that this scheme should be placed upon a basis of insurance, I think it would have been far better to have started with a clean sheet, to have had no debt on the fund at all, and to have used the accumulated reserves for the purpose of reserves, so that the money would be there to meet the lean years which inevitably must come.

We saw to-day a very fine exhibition of tactics on the part of the Government. We saw an Amendment moved, and we saw the Chancellor of the Exchequer gracefully accept it. There has been such a strong opinion, not only in the House, but in the country, that something different should be done about this Clause that the Government have decided to bow in some measure to the public opinion created and have made paper concessions which, in my opinion, amount to very little at all. The Chancellor says, "Yes, you can pay £5,000,000 a year instead of £5,500,000, and we will see what we can do so far as the interest on the fund is concerned." But those things in themselves amount to very little, because, as has been pointed out so often, there is nothing to stop the Board of Control, who have it in their power, paying more in repayment if they wish, and there is no guarantee yet that actually the fund will only pay 3 per cent. interest instead of 3½ per cent.

On these benches we feel that the debt should not have been placed upon the fund, in view of the fact that here is a Bill which we are told is to settle the whole question of unemployment insurance for many years to come. If the Government believe that unemployment can be dealt with on the basis of insurance, they have done their best in this Bill to make it almost impossible for this to be a real insurance scheme at all, and someone or other in the not far distant future will be coming to this House and confessing that the whole scheme has broken down. I notice that very urgent appeals are made by financial leaders that there should be some reduction in contributions, and I suggest that for the most part they are more concerned with getting a reduction in the employers' contributions than almost anything else that has been mentioned to-day. That is the real and fundamental point that has been made from those benches. They have said, "Let us get contributions reduced; let us take a burden from the employers, or from industry." The workers, however, are entitled to have some say in this matter, as they pay 10d. a week out of very small wages, and many of them in my constituency pay 10d. out of their full week's wage of only 35s.

I put it to the Committee that the badly-paid workers—and they are in this country by the million—are making greater sacrifices, so far as this fund is concerned, than any other section of the community, yet they themselves would not desire to have their contributions reduced if it meant worsening the conditions of men who have been out of employment for a considerable time through no fault of their own. It has been said that in some way or another it is the best men who have been left in employment, but that is not at all true. Some of the best workmen in this country have been unemployed for 18 months, two years, and even three years—skilled workmen and craftsmen—and hon. Members who come here and talk like that do not recognise that the machine displaces skilled men and that there is no place for them again in industry. If it comes to a question of some men being better than others, I am of the opinion that it is not the best men who have been left in employment; it is rather the best men who have been displaced from their employment because of the introduction of machinery, because of new methods, and because of the working of our social system.

When the hon. Member for Gorton spoke about these people on transitional benefit receiving charity from the nation, I was astonished. He said he was indignant about something or other. I am indignant to think that men who have done service to the community, who have worked when they have had the chance to work, and who are only too willing to work again should be looked down upon and scorned as if they were receiving charity, simply because, unfortunately, they have been receiving transitional benefit. I put it to the Committee that the unemployed man is the victim of circumstances, and it is not his fault that he is unemployed. He is entitled to be treated as a human being, and he should never be sneered at, at least by a man who pretends to represent a working-class constituency, and told that he is simply receiving charity. The Government have a tremendous majority inside this House, but I suggest that they have not got that majority in the country, and that when we take this Bill to the country for their verdict, the Government will not feel quite so happy about it as they do now. The country will declare that if the Government were in earnest in bringing in an Unemployment Insurance Bill, and if they believed in the doctrine of insurance as the basis of unemployment pay, they should have shouldered the burden of the past and started the fund free from debt.

The Bill in many respects is so unsatisfactory that those Members who believe that the concessions which the Chancellor has so gracefully given them this evening are likely to please public opinion outside will find themselves woefully mistaken. It is true that it does not take very much to please some hon. Members. They go away and say that the Chancellor of the Exchequer has made a very fine concession, but unemployed men and workers will realise that what has been done to-day has been no help at all. The position of the party on these benches is clear. We are against the payment of this debt from the Unemployment Insurance Fund, and we will fight against it. We are not pleased with the concession that has been made, and we are not inclined to say, "Thank you kindly, good Sir, for what you have done." We declare that the Chancellor of the Exchequer has done nothing at all to help the great mass of the unemployed and to put this Bill on a sound insurance basis, and for those reasons we shall be justified up to the hilt, and the country will justify us, in going into the Lobby against this Clause.

8.15 p.m.

Mr. MOLSON

The hon. Member, like the hon. Member for Ebbw Vale (Mr. A. Bevan), has criticised those of us who have tried to persuade the Chancellor of the Exchequer to take a more generous view than he has done, and because by putting down certain Amendments we have succeeded in obtaining some small concessions. The Labour party have done nothing to get concessions, but have declared their hostility to the whole Clause. I am perfectly prepared to meet the hon. Member anywhere in the country and to justify the action which Conservative Members have taken in trying to draw up Amendments which it was possible for the Chancellor of the Exchequer to accept, as a result of which we have been able to achieve something for the cause of the unemployed. To adopt a purely negative and, on many occasions, a merely obstructive attitude such as the official Opposition have adopted is not in the interests of those whom they claim to represent.

I find myself in some agreement with the Opposition in thinking that the concession which the Chancellor of the Exchequer has made is not really a very substantial one. Had we not ourselves drawn up those Amendments I think the Government themselves would have been obliged to make some such alteration in the Bill. When the Bill was orginally introduced the fund was not more than just solvent, and at the present time it is paying off debt at a very satisfactory and very rapid rate. As the whole finance of the Bill was calculated upon a debt of £115,000,000 I do not think the Government could have put it upon the Statute Book if, by that time, the debt had been reduced, as we hope it will have been, by something like £15,000,000, and have still charged the fund with the sinking fund which was considered necessary when the debt was at a higher total.

I remain impenitently of the view that it is not fair and equitable that the whole of the debt should be made chargeable to the fund. The Chancellor of the Exchequer has pointed out that £76,000,000 of the debt was incurred in the two years during which the Socialist Government were in office and when transitional payments had already been taken over as a charge upon the Exchequer; but even he had to admit that in the earlier years, when the debt was at first being accumulated, certain portions of the debt were being incurred in what is called un-covenanted benefit, and even about half the transitional payments were being paid out of the fund. Therefore, a considerable portion of the debt was incurred by the making of payments which to-day are recognised as being the responsibility of the Exchequer.

In the case of standard benefit also, it is perfectly arguable that even there some of the debt which has been incurred ought not really to rest upon the fund. The Chancellor of the Exchequer pointed out the other day, when another Clause was under discussion, that in the Act of 1920 the responsibility was imposed on the Treasury of making certain that the fund did not become insolvent, and that they were to make certain of its solvency either by increasing contributions or by reducing benefits. In his speech this afternoon the Chancellor of the Exchequer only referred to the possibility of increasing contributions. He said that those people who were in the fund and had not had their contributions raised as soon as they should have been raised, had to that extent benefited during those years when the debt was being accumulated and, therefore, it was fair that they should now be called upon to make a contribution towards its redemption. I suggest that where the real blame lay was that the cut in benefit was not made as soon as it should have been. It was only when this Government came into power, after the financial crisis had arisen, that a check was put on the accumulation of the debt which, as the Chancellor of the Exchequer admitted on another occasion, has been due to maladministration and to the fact that successive Governments—especially the last Socialist Government, because the largest amount of debt was accumulated at that time—have shown a regrettable unwillingness to adopt those strict actuarial principles which are now being applied, and will be applied in future.

Therefore, in regard to payments which were made in respect of extended benefit, in regard to a certain part of the transitional payments, and in regard to some of the money which was paid in standard benefit, there is a very clear equitable claim that a portion of the debt should be undertaken by the Exchequer. We arrive at the same conclusion if we look at the matter from another point of view. If it had not been that the principle of unemployment insurance benefit was stretched in order to pay benefit to persons who were not strictly entitled to have any benefit, or if it had not been paid out at too high a rate, there would have been an equivalent burden either upon the ratepayer or upon the taxpayer. Therefore, from both points of view it seems to me that there is a strong equitable claim that some part of the debt should be undertaken by the Exchequer. There is a still stronger claim under this Bill, because by Clause 3 the Chancellor of the Exchequer will get a certain benefit by the extension of standard benefit to a maximum period of 52 weeks. Here it can again be said that some of the money which is now in the fund is being applied to a purpose which if it were not for Clause 3 would be a liability which would fall directly on the Exchequer.

I am sorry that the Chancellor of the Exchequer has not seen his way to accept the force of these arguments, and I am particularly sorry that although in so many matters, especially in the more unpopular features of the Bill, the Government have relied very largely upon the authority of the Royal Commission on Unemployment Insurance, in this case where the Royal Commission came to the definite conclusion that it would be inequitable to put the whole debt of the fund upon the fund, the Chancellor of the Exchequer has not seen fit to follow them. In a reply to the right hon. and learned Member for Hillhead (Sir R. Horne) the other day, he pointed out that the contribution which was being paid by the Exchequer was larger than was recommended by the Royal Commission. He suggested that the two things must go together and that as the contribution being made by the Exchequer was larger, the claim that the Exchequer should undertake part of the debt did not arise. He took the view that the two things were intimately linked together. If he looks at the Report of the Royal Commission I think he will find that that is not the case, and that Mr. Trouncer only took that view. A footnote makes it clear that it was not the majority of the Royal Commission but one dissentient who thought that there should be any connection between the two.

In spite of what the hon. Member for Ebbw Vale has said and in spite of the gibes which he has directed at the supporters of the Government, we feel that we have achieved something useful to-day, that we have done something to reduce the burden on the Unemployment Fund, which will be to the advantage of the unemployed. Although it is a small concession and one for which I cannot feel any great gratitude, I thank the Chancellor of the Exchequer for it, and I shall not at any rate vote as I had intended against the Clause standing part.

8.26 p.m.

Mr. GORDON MACDONALD

Hon. Members on this side of the House fail to see that the concession made by the Chancellor of the Exchequer will be of any advantage to the unemployed, and as long as Sub-section (3) of Clause 18 remains in the Bill it cannot be of any advantage. It says that if the Unemployment Insurance Statutory Committee at any time considers that there are sufficient funds available to increase the instalments, they may do so. As long as that paragraph remains we fail to see what advantage this so-called concession can be to the unemployed. Our attitude is clear. Who should bear the present debt the unemployed, or the whole nation? The debt was incurred principally because of the distress throughout the country over a prolonged period. The insured population throughout that period made a substantial contribution towards the maintenance of those in distress, indeed, they made a bigger contribution than any other section of the nation, and we consider that they have discharged their responsibility towards the unemployed. For the Government to say now that there is a certain amount of the cost which they failed to meet and they are going to allow them to meet it during the next 37 or 40 years is wholly unfair to this section of the nation. If it was argued that the insured population had not done its share towards meeting the problem of the unemployed, and that the Government were going to give them another 40 years in which to discharge the remainder of their responsibility, I could understand it, but I do not expect the Financial Secretary to say that the insured population have not made their fair contribution towards meeting this problem.

The right hon. Member for Hillhead (Sir R. Horne) emphasised the manner in which this debt had accumulated. I was rather surprised that he should feel so self-satisfied with what was said in reply, and I am also surprised that the hon. Member for Doncaster (Mr. Molson) should feel satisfied with the reply. All that the Chancellor of the Exchequer said was, "I am impressed by what has been said. The speeches I have heard do carry out what we as a Government thought might be done. We think we might lessen the annual contribution of the Unemployed Fund towards this debt and so we propose to prolong the period it will have to pay the debt." There is no value in that concession, at least, we fail to see any value, and it is not because we are not prepared to give credit where credit is due. It does not in any way meet our objection to the Clause. The hon. Member for Gorton (Mr. Bailey) tried to show that 26 weeks' benefit was equal to 19 years' contributions. If that is the mentality which is going to decide the treatment of this section of the population, who are through no fault of their own unable to find a job, then I am not sure that representative Government is the best form of Government. If the representatives of the people in this House are going to argue that since benefits for a certain period are equal in amount to contributions for a much longer period and that therefore no one has any cause for complaint, if that is going to be their attitude, then those who elected them will feel dissatisfied with their representation. The hon. Member for Wednesbury (Mr. Banfield) was quite right, even the Tory party will repudiate the assumptions underlying the argument of the hon. Member for Gorton.

The argument of the right hon. Member for Sparkbrook (Mr. Amery) did separate those who have kept their jobs from those who have lost them, but his reference to the persons who keep their jobs as being the cream of the working classes was a most unfair reflection on those who have lost them. The miners in Lancashire who are out of work are equally as good as the men in work, and the miners themselves would be the first to admit that their comrades who have lost their jobs are just as good men as they themselves. The Bill itself is not quite free from putting a stigma on the person who has been unemployed for a long period. The differentiation in the treatment of a man who has been unable to get work for a certain number of weeks as against the man who does, is, in our opinion, unjustifiable. I can never see why a man who has been out of work for 27 weeks should receive different treatment from the man who has been out of work for seven weeks. It is no use saying that we should betray the principle of insurance because it has never been applied. Those who have been out of work for 27 weeks are in far greater need of unemployment benefit than the man who has been out for seven weeks, and I can never understand on what basis this differentiation is made.

The Clause is very objectionable. Does the Parliamentary Secretary think that its deletion would make the Bill worse? I agree that from a Conservative point of view this is a genuine attempt to deal with a difficult problem, and I should not expect a Conservative Government to go any further than the Bill proposes. But how would the Bill be made worse if this Clause were deleted? It is a start by the Government to deal in a comprehensive way with a most difficult problem, and if the Government are anxious for it to be a success then they should place this huge debt in its entirety on the Exchequer. The Royal Commission made many recommendations with which we on this side do not agree but we do agree with the suggestion that to place the whole of the debt on the Unemployment Fund would be inequitable.

We think that if the fund is to have any chance and if the better treatment promised to the unemployed is not to be considerably delayed, this Clause should be deleted. Our case is that the workers, both the insured section of those in employment, and the insured section of those out of employment, have made their contribution to dealing with the fund and that it is unfair to continue their contribution in this manner. It not only delays that better treatment of the unemployed to which they are entitled but it makes it impossible either for contributions to be reduced or for benefits to be increased. I agree with other hon. Members that if the workers themselves had to choose they would prefer to maintain the contribution at the high figure of 10d. per week for an adult rather than reduce the benefits payable to those who are unemployed. They would also prefer to keep the contribution at 10d. and to abolish the means test than to retain the means test in operation with reduced contributions. The placing of this debt on the fund prevents either reduction of contributions or increase of benefits. Hence we on this side have only one course open to us and that is to vote against the inclusion of the Clause in the Bill.

8.37 p.m.

Mr. BUCHANAN

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

We are discussing a Clause dealing with a very important financial question and there is no representative of the Treasury present. Whatever differences there may be between hon. Members on the Opposition Front Bench and myself, I hold that they are entitled to the courtesy which is usually extended to an Opposition and I think that for the Financial Secretary to the Treasury to have gone out while an hon. Member was speaking from the Opposition Front Bench was not courteous. We are entitled to the presence of a representative of the Treasury on this occasion. We on this side are entitled to the courtesy which would be given to any other Opposition and it is most unfair for the Financial Secretary deliberately to walk out, when the Chancellor of the Exchequer is not present and only the Parliamentary Secretary to the Ministry of Labour is here to answer our arguments. I take it as an insult to the hon. Member for Ince (Mr. G. Macdonald) that the Financial Secretary should walk out in the middle of the hon. Member's speech. That is not good for Parliament; it is not good for the Financial Secretary himself and it is not good for the other Members of the House of Commons. I am not going to argue the case or go into the merits of this question until we have a representative of the Treasury present.

Question put, "That the Chairman do report Progress, and ask leave to sit again."

The Committee divided : Ayes, 62; Noes, 208.

Division No. 226.]	AYES.	[3.54 p.m.
Acland-Troyte, Lieut.-Colonel	Clarry, Reginald George	Gluckstein, Louis Halle
Agnew, Lieut.-Com. P. G.	Clayton, Sir Christopher	Glyn, Major Ralph G. C.
Albery, Irving James	Cobb, Sir Cyril	Goff, Sir Park
Allen, Sir J. Sandeman (Liverp'l, W.)	Collins, Rt. Hon. Sir Godfrey	Goldie, Noel B.
Allen, William (Stoke-on-Trent)	Colville, Lieut.-Colonel J.	Goodman, Colonel Albert W.
Anstruther-Gray, W. J.	Conant, R. J. E.	Gower, Sir Robert
Apsley, Lord	Cook, Thomas A.	Graham, Sir F. Fergus (C'mb'rl'd. N.)
Atholl, Duchess of	Cooke, Douglas	Granville, Edgar
Baillie, Sir Adrian W. M.	Cooper, A. Duff	Grattan-Doyle, Sir Nicholas
Baldwin, Rt. Hon. Stanley	Craddock, Sir Reginald Henry	Griffith, F. Kingsley (Middlesbro', W.)
Baldwin-Webb, Colonel J.	Cranborne, Viscount	Grimston, R. V.
Barclay-Harvey, C. M.	Croft, Brigadler-General Sir H.	Guest, Capt. Rt. Hon. F. E.
Beaumont, Hon. R. E. B. (Portsm'th, C)	Crooke, J. Smedley	Guinness, Thomas L. E. B.
Benn, Sir Arthur Shirley	Crookshank, Col. C. de Windt (Bootle)	Gunston, Captain D. W.
Betterton, Rt. Hon. Sir Henry B.	Crookshank, Capt. H. C. (Galnsb'ro)	Guy, J. C. Morrison
Bllndell, James	Cross, R. H.	Hacking, Rt. Hon. Douglas H.
Borodale, Viscount	Culverwell, Cyrll Tom	Hales, Harold K.
Bossom, A. C.	Davies, Maj. Geo. F.(Somerset, Yeovil)	Hall, Capt. W. D'Arcy (Brecon)
Boulton, W. W.	Davison, Sir William Henry	Hamilton, Sir George (Ilford)
Bower, Lieut.-Com. Robert Tatton	Denman, Hon. R. D.	Hamilton, Sir R. W. (Orkney & Zetl'nd)
Bowyer, Capt. Sir George E. W.	Despencer-Robertson, Major J. A. F.	Hannon, Patrick Joseph Henry
Boyd-Carpenter, Sir Archibald	Dickle, John P.	Harbord, Arthur
Broadbent, Colonel John	Dixey, Arthur C. N.	Hartlngton, Marquess of
Brocklebank, C. E. R.	Duckworth, George A. V.	Hartland, George A.
Brown, Col. D. C. (N'th'I'd., Hexham)	Dugdale, Captain Thomas Lionel	Harvey, Major S. E. (Devon, Totnes)
Brown, Ernest (Leith)	Duggan, Hubert John	Haslam, Sir John (Bolton)
Brown, Brig.-Gen. H. C. (Berke., Newb'y)	Duncan, James A. L. (Kensington, N.)	Headlam, Lieut.-Col. Cuthbert M.
Browne, Captain A. C.	Dunglass, Lord	Heligers, Captain F. F. A.
Buchan, John	Eady, George H.	Henderson, Sir Vivian L. (Chelmsford)
Buchan-Hepburn, p. G. T.	Elmley, Viscount	Heneage, Lieut.-Colonel Arthur P.
Bullock, Captain Malcolm	Emmott, Charles E. G. C.	Hills, Major Rt. Hon. John Waller
Burgin, Dr. Edward Leslie	Emrys-Evans, P. V.	Holdsworth, Herbert
Burnett, John George	Entwistle, Cyril Fullard	Hope, Sydney (Chester, Stalybridge)
Cadogan, Hon. Edward	Erskine, Lord (Weston-super-Mare)	Hore-Belisha, Leslie
Calne, G. R. Hall.	Erskine-Bolst, Capt. C. C. (Blk'pool)	Horne, Rt. Hon. Sir Robert S.
Campbell, Sir Edward Taswell (Brmly)	Evans, Capt. Arthur (Cardiff, S.)	Horsbrugh, Florence
Caporn, Arthur Cecil	Everard, W. Lindsay	Howard, Tom Forrest
Cayzer, Sir Charles (Chester, City)	Fermoy, Lord	Howitt, Dr. Alfred B.
Cayzer, Maj. Sir H. R. (P'rtsm'th, S.)	Filnt, Abraham John	Hudson, Robert Spear (Southport)
Cazalet, Thelma (Islington, E.)	Foot, Dingle (Dundee)	Hunter, Dr. Joseph (Dumfries)
Cazalet, Capt. V. A. (Chippenham)	Foot, Isaac (Cornwall, Bodmin)	Hurd, Sir Percy
Chamberlain, Rt. Hon. Sir J. A. (Blrm., W)	Fox, Sir Gifford	Hurst, Sir Gerald B.
Chamberlain, Rt. Hon. N.(Edgbaston)	Fuller, Captain A. G.	Hutchison, W. D. (Essex, Romf'd)
Chapman, Col. R.(Houghton le-Spring)	Ganzonl, Sir John	James, Wing-Com. A. W. H.
Chorlton, Alan Ernest Leolric	Gauit, Lieut.-Col. A. Hamilton	Jamleson, Douglas
Christie, James Archibald	Gilmour, Lt.-Col. Rt. Hon. Sir John	Jesson, Major Thomas E.
Clarke, Frank	Glossop, C. W. H.	Johnstone, Harcourt (S. Shields)
Jones, Henry Haydn (Merioneth)	Moss, Captain H. J.	Smiles, Lieut.-Col. Sir Walter D.
Jones, Lewis (Swansea, West)	Muirhead, Lieut.-Colonel A. J.	Smith, R. W. (Ab'rd'n & Klnc'dlne, C.)
Ker, J. Campbell	Munro, Patrick	Smithers, Waldron
Kerr, Lieut.-Col. Charles (Montrose)	Nation, Brigadier-General J. J. H.	Somervell, Sir Donald
Keyes, Admiral Sir Roger	Nicholson, Godfrey (Morpeth)	Somerville, Annesley A. (Windsor)
Knight, Holford	Nicholson, Rt. Hn. W. G. (Petersf'ld)	Soper, Richard
Knox, Sir Alfred	Normand, Rt. Hon. Wilfrid	Southby, Commander Archibald R. J.
Lamb. Sir Joseph Quinton	Nunn, William	Spencer, Captain Richard A.
Lambert, Rt. Hon. George	Peaks, Captain Osbert	Spender-Clay, Rt. Hon. Herbert H.
Law, Sir Alfred	Pearson, William G.	Stanley, Rt. Hon. Lord (Fylde)
Law, Richard K. (Hull, S. W.)	Penny, Sir George	Stanley, Hon. O. F. G. (Westmorland)
Leckle, J. A.	Parkins, Walter R. D.	Stevenson, James
Leech, Dr. J. W.	Petherick, M.	Stewart, J. H. (Fife, E.)
Leighton, Major B. E. P.	Peto, Sir Basil E. (Devon, Barnstaple)	Stones, James
Lennox-Boyd, A. T.	Peto, Geoffrey K.(W'verh'pt'n, Bllst'n)	Storey, Samuel
Levy, Thomas	Pickering, Ernest H.	Stourton, Hon. John J.
Lewis, Oswald	Potter, John	Strickland, Captain W. F.
Lindsay, Kenneth (Kilmarnock)	Powell, Lieut.-Col. Evelyn G. H.	Stuart, Lord C. Crichton.
Lister, Rt. Hon. Sir Philip Cunliffe.	Pownall, Sir Assheton	Sueter, Rear-Admiral Sir Murray F.
Lloyd, Geoffrey	Procter, Major Henry Adam	Summersby, Charles H.
Locker-Lampson, Rt. Hn. G.(Wd. G'n)	Pybus, Sir Percy John	Sutcllffe, Harold
Locker-Lampson, Com. O. (H'ndsw'th)	Ralkes, Henry V. A. M.	Tate, Mavis Constance
Loftus, Pierce C.	Ramsay, Alexander (W. Bromwich)	Taylor, Vice-Admiral E. A. (P'dd'gt'n, S.)
Lovat-Fraser, James Alexander	Ramsay, Capt. A. H. M. (Midlothian)	Thomas, Rt. Hon. J. H. (Derby)
Lumley, Captain Lawrence R.	Ramsay, T. B. W. (Western Isles)	Thomas, James P. L. (Hereford)
Mabane, William	Ramsden, Sir Eugene	Thomson, Sir Frederick Charles
MacAndrew, Lt.-Col. C. G. (Partick)	Rea, Walter Russell	Thorp, Linton Theodore
MacAndrew, Capt. J. O. (Ayr)	Reed, Arthur C. (Exeter)	Todd, A. L. S (Kingswinford)
McCorquodale, M. S.	Reid, Capt. A. Cunningham.	Touche, Gordon Cosmo
MacDonald, Rt. Hon. J. R. (Seaham)	Reid, James S. C. (Stirling)	Train, John
McEwen, Captain J. H. F.	Raid, William Allan (Derby)	Tree, Ronald
McKie, John Hamilton	Remer, John R.	Tryon, Rt. Hon. George Clement
Maclay, Hon. Joseph Paton	Rickards, George William	Tufnell, Lieut.-Commander R. L.
McLean, Major Sir Alan	Roberts, Aled (Wrexham)	Ward, Lt.-Col. Sir A. L. (Hull)
McLean, Dr. W. H. (Tradeston)	Rosbotham, Sir Thomas	Ward, Irene Mary Bewick (Wallsend)
Macmillan, Maurice Harold	Ross Taylor, Walter (Woodbridge)	Ward, Sarah Adelaide (Cannock)
Macquisten, Frederick Alexander	Ruggles-Brise, Colonel E. A.	Waterhause, Captain Charles
Magnay, Thomas	Runclman, Rt. Hon. Walter	Watt, Captain George Steven H.
Maitland, Adam	Russell, Alexander West (Tynemouth)	Wayland, Sir William A.
Manningham-Buller, Lt.-Col. Sir M.	Russell, Hamer Field (Sheffield, B'tslde)	Weymouth, Viscount
Margesson, Capt. Rt. Hon. H. D. R.	Russell, R. J. (Eddisbury)	Whiteside, Borras Noel H.
Martin, Thomas B.	Rutherford, Sir John Hugo (Liverp'l)	Williams, Charles (Devon, Torquay)
Mayhew, Lieut.-Colonel John	Salmon, Sir Isidore	Williams, Herbert G. (Croydon, S.)
Mills, Major J. D. (New Forest)	Salt, Edward W.	Willoughby de Eresby, Lord
Milne, Charles	Samuel, Sir Arthur Michael (F'nham)	Wills. Wilfrid D.
Mitchell, Harold P. (Br'tf'd & Chlsw'k)	Sandeman, Sir A. N. Stewart	Wilson, G. H. A. (Cambridge U.)
Mitchell, Sir W. Lane (Streatham)	Sanderson, Sir Frank Barnard	Windsor-Clive, Lieut.-Colonel George
Molson, A. Hugh Elsdale	Sassoon, Rt. Hon. Sir Philip A. G. D.	Wise, Alfred R.
Monsell, Rt. Hon. Sir B. Eyres	Savery, Samuel Servington	Wood, Rt. Hon. Sir H. Kingsley
Moore, Lt.-Col. Thomas C. R. (Ayr)	Scone, Lord	Wood, Sir Murdoch McKenzie (Banff)
Moreing, Adrian C.	Shaw, Helen B. (Lanark, Bothwell)	Worthington, Dr. John V.
Morris. Owen Temple (Cadiff. E.)	Shepperson, Sir Ernest W.	Young, Ernest J. (Middlesbrough, E.)
Morris-Jones, Dr. J. H. (Denbigh)	Simmonds, Oliver Edwin
Morrison, G. A. (Scottish Univer'ties)	Sinclair, Col. T. (Queen's Unv., Belfast)	TELLERS FOR THE AYES. —
Morrison, William Shaphard	Skelton, Archibald Noel	Sir Victor Warrender and Mr. Womersley.
NOES.
Adams, D. M. (Poplar, South)	Groves, Thomas E.	Salter, Dr. Alfred
Attlee, Clement Richard	Grundy, Thomas W.	Smith, Tom (Normanton)
Banfield, John William	Hall, George H. (Merthyr Tydvll)	Thorne, William James
Batey, Joseph	Healy, Cahir	Tinker, John Joseph
Bevan, Aneurin (Ebbw Vale)	Hicks, Ernest George	Wedgwood, Rt. Hon. Joslah
Buchanan, George	Jenkins, Sir William	West, F. R.
Cocks, Frederick Seymour	Jones, Morgan (Caerphilly)	Williams, David (Swansea, East)
Daggar, George	Lawson, John James	Williams, Edward John (Ogmore)
Davies, David L. (Pontypridd)	Leonard, William	Williams. Dr. John H. (Llanelly)
Dobble, William	Logan, David Gilbert	Williams, Thomas (York. Don Valley)
Edwards, Charles	Lunn, William	Wilmot, John
George Major G. Lloyd (Pembroke)	McEntee, Valentine L.
Greenwood, Rt. Hon. Arthur	Maclean, Nell (Glasgow, Govan)	TELLERS FOR THE NOES.—
Griffiths, T. (Monmouth, Pontypool)	Parkinson, John Allan	Mr. G. Macdonald and Mr. D. Graham.

Division No. 227.]	AYES.	[8.40 p.m.
Acland, Rt. Hon. Sir Francis Dyko	Greenwood, Rt. Hon. Arthur	Milner, Major James
Adams, D. M. (Poplar, South)	Grenfell, David Rees (Glamorgan)	Owen, Major Goronwy
Attlee, Clement Richard	Griffith, F. Kingsley (Middlesbro', W.)	Parkinson, John Allen
Banfield, John William	Grundy, Thomas W.	Pickering, Ernest H.
Batey, Joseph	Hall, George H. (Merthyr Tydvil)	Salter, Dr. Alfred
Bevan, Aneurin (Ebbw Vale)	Hamilton, Sir R. W.(Orkney & Zetl'nd)	Samuel, Rt. Hon. Sir H. (Darwen)
Buchanan, George	Healy, Cahir	Smith, Tom (Normanton)
Cape, Thomas	Jenkins, Sir William	Tinker, John Joseph
Cocks, Frederick Seymour	Jones, Henry Haydn (Merloneth)	Wedgwood, Rt. Hon. Joslah
Cripps, Sir Stafford	Jones, Morgan (Caerphilly)	West, F. R.
Curry, A. C.	Kirkwood, David	Williams, David (Swansea, East)
Daggar, George	Lawson, John James	Williams, Edward John (Ogmore)
Davies, David L. (Pontypridd)	Leonard, William	Williams, Dr. John H. (Llanelly)
Davies, Rhys John (Westhoughton)	Llewellyn-Jones, Frederick	Young, Ernest J. (Middlesbrough, E.)
Dobble, William	Lunn, William
Edwards, Charles	Maclay, Hon. Joseph Paton	TELLERS FOR THE AYES. —
Evans, R. T. (Carmarthen)	Maclean, Neil (Glasgow, Govan)	Mr. G. Macdonald and Mr. D. Graham.
George, Major G. Lloyd (Pembroke)	Mallalleu, Edward Lancelot
George, Megan A. Lloyd (Anglesea)	Mason, David M. (Edinburgh, E.)

NOES.
Allen, Sir J. Sandeman (Llverp'l, W.)	Goodman, Colonel Albert W.	Mitchell. Sir W. Lane (Streatham)
Applln, Lieut.-Col. Reginald V. K.	Graham, Sir F. Fergus (C'mb'rl'd. N.)	Molson, A. Hugh Elsdale
Aske, Sir Robert William	Grattan-Doyle, Sir Nicholas	Monsell, Rt. Hon. Sir B. Eyres
Astbury, Lieut.-Com. Frederick Wolle	Greene, William P. C.	Moreing, Adrian C.
Bailey, Eric Alfred George	Guest, Capt. Rt. Hon. F. E.	Morris, Owen Temple (Cardiff, E.)
Baldwin, Rt. Hon. Stanley	Gunston, Captain D. W.	Morris-Jones, Dr. J. H. (Denbigh)
Baldwin-Webb, Colonel J.	Guy, J. C. Morrison	Morrison, G. A. (Scottish Unlver'tlos)
Barrie, Sir Charles Couper	Hacking, Rt. Hon. Douglas H.	Morrison, William Shepherd
Bennett, Capt. Sir Ernest Nathaniel	Hales, Harold K.	Moss, Captain H. J.
Botterton, Rt. Hon. Sir Henry B.	Hammersley, Samuel S.	Nation, Brigadier-General J. J. H.
Bllndell, James	Hanbury, Cecil	Normand, Rt. Hon. Wilfrid
Boulton, W. W.	Hanley, Dennis A	Nunn, William
Bowyer, Capt. Sir George E. W.	Hannon, Patrick Joseph Henry	O'Donovan, Dr. William James
Boyd-Carpenter, Sir Archibald	Harbord, Arthur	Oman Sir Charles William C.
Bralthwaite, J. G. (Hillsborough)	Haslam, Sir John (Bolton)	Ormsby-Gore, Rt. Hn. William G. A.
Broadbent, Colonel John	Hills, Major Rt. Hon. John Waller	Peake, Captain Osbert
Brown, Ernest (Leith)	Holdsworth, Herbert	Pearson, William G.
Browne, Captain A. C.	Hore-Belisha, Leslie	Peat, Charles U.
Burgin, Dr. Edward Leslie	Hornby, Frank	Perkins, Walter R. D.
Burnett, John George	Horobin, Ian M.	Petherick, M.
Butler, Richard Austen	Horsbrugh, Florence	Peto, Sir Basll E. (Devon, Barnstaple)
Cadogan, Hon. Edward	Hudson, Robert Spear (Southport)	Potter, John
Casels, James Dale	Hume, Sir George Hopwood	Power, Sir John Cecil
Chamberlain, Rt. Hon. N. (Edgbaston)	Hunter, Dr. Joseph (Dumfries)	Procter, Major Henry Adam
Chapman, Col. R. (Houghton-le-Spring)	Hunter, Capt. M. J. (Brigg)	Radford, E. A.
Christie, James Archibald	Hunter-Weston, Lt.-Gen. Sir Aylmer	Raikes, Henry V. A. M.
Clarke, Frank	Hurd, Sir Percy	Ramsay, Capt. A. H. M. (Midlothian)
Clarry, Reginald George	James, Wing-Com. A. W. H.	Ramsay, T. B. W. (Western Isles)
Clayton, Sir Christopher	Jamleson, Douglas	Rankin. Robert
Clydesdale, Marquess of	Jesson, Major Thomas E.	Reid, Capt. A. Cunningham.
Cobb, Sir Cyril	Jones, Lewis (Swansea, West)	Remer, John R.
Colfox, Major William Philip	Kerr, Lieut.-Col. Charles (Montrose)	Rickards, George William
Colville, Lieut.-Colonel J.	Lamb. Sir Joseph Quinton	Ropner, Colonel L.
Cook, Thomas A.	Law, Sir Alfred	Rosbotham, Sir Thomas
Craddock, Sir Reginald Henry	Law, Richard K. (Hull. S. W.)	Ross, Ronald D.
Cranborne, Viscount	Leech, Dr. J. W.	Ruggles-Brise, Colonel E. A.
Craven-Ellis, William	Lennox-Boyd, A. T.	Runge, Norah Cecil
Crooke, J. Smedley	Lewis, Oswald	Russell, Hamer Field (Sheffield, B'tslde)
Croom-Johnson, R. P.	Lindsay, Kenneth (Kilmarnock)	Russell, R. J. (Eddlsbury)
Cross, R. H.	Lindsay, Noel Ker	Rutherford, Sir John Hugo (Liverp'l)
Crossley, A. C.	Little, Graham-, Sir Ernest	Salt, Edward W.
Davies, Maj. Geo. F. (Somerset, Yeovil)	Llewellin, Major John J.	Samuel, Samuel (W'dsworth, Putney)
Dawson, Sir Phillp	Lockwood, John C. (Hackney, C.)	Sanderson, Sir Frank Barnard
Denman, Hon. R. D.	Loftus, Pierce C.	Savery, Samuel Servington
Dickle, John P.	Lovat-Fraser. James Alexander	Shakespeare, Geoffrey H.
Duncan, James A. L. (Kensington, N.)	Mabane, William	Shaw, Helen B. (Lanark, Bothwell)
Dunglass, Lord	MacAndrew, Lieut.-Col. C. G.(Partick)	Shaw, Captain William T. (Forfar)
Eady, George H.	MacAndrew, Capt. J. O. (Ayr)	Shepperson, Sir Ernest W.
Elmley, Viscount	McLean, Major Sir Alan	Shute, Colonel J. J.
Emmott, Charles E. G. C.	Macmillan, Maurice Harold	Simmonds, Oliver Edwin
Erskine, Lord (Weston-super-Mare)	Magnay, Thomas	Sinclair, Col. T. (Queen's Unv., Belfast)
Erskine-Bolst, Capt. C. C. (Blk'pool)	Maitland, Adam	Skelton, Archibald Noel
Essenhigh, Reginald Clare	Margesson, Capt. Rt. Hon. H. D. R.	Smiles, Lieut.-Col. Sir Walter D.
Everard, W. Lindsay	Marsden, Commander Arthur	Smithers, Waldron
Fleming, Edward Lascelles	Martin, Thomas B.	Somerville, Annesley A. (Windsor)
Fremantle, Sir Francis	Mayhew, Lieut.-Colonel John	Somerville. D. G. (Willesden, East)
Fuller, Captain A. G.	Mills, Sir Frederick (Leyton. E.)	Soper, Richard
Gautt, Lieut.-Col. A. Hamilton	Mills. Major J. D. (New Forest)	Southby, Commander Archibald R. J.
Gillett. Sir George Masterman	Milne. Charles	Spens, William Patrick
Goff, Sir Park	Mitchell, Harold P. (Br'tfd & Chisw'k)	Stanley, Hon. O. F. G. (Westmorland)

Stevenson, James	Thomson, Sir Frederick Charles	Wills. Wilfrid D.
Stones, James	Thorp, Linton Theodore	Wilson, Lt. Col. Sir Arnold (Hertf'd)
Storey, Samuel	Todd, Capt. A. J. K. (B'wick-on-T.)	Wilson, G. H. A. (Cambridge U.)
Strauss, Edward A.	Todd, A. L. S. (Kingswinford)	Wise, Alfred R.
Strickland, Captain W. F.	Wallace, John (Duntermline)	Withers, Sir John James
Sueter, Rear-Admiral Sir Murray F.	Ward, Irene Mary Bewick (Wallsend)	Worthington, Dr. John V.
Sugden, Sir Wilfrid Hart	Ward, Sarah Adelaide (Cannock)
Summersby, Charles H.	Waterhouse, Captain Charles	TELLERS FOR THE NOES.—
Sutcliffe, Harold	Whiteside, Borras Noel H.	Captain Austin Hudson and Mr. Womersley.
Tate, Mavis Constance	Whyte, Jardine Bell
Templeton, William P.	Williams, Herbert G. (Croydon, S.)

Question again proposed, "That the Clause, as amended, stand part of the Bill."

8.47 p.m.

Mr. BUCHANAN

I rise to continue the discussion on this Clause. Whatever effect the concession which the Chancellor of the Exchequer announced will have on the Insurance Fund, it will have little effect on the conditions of the unemployed. The Committee to-day has been discussing questions of insurance and insurance rights, and one of the points in the discussion that has struck me is the fact that this fund has never been on an insurance basis at all. As a matter of fact, large sections of the working-class are outside the Insurance Fund and a great number of those who are outside are the best lives. The whole of the Police Force and the school teachers, and a large section of municipal employés are outside the insurance scheme, and they comprise the best lives from an insurance point of view. As long as large sections of people who should properly be inside the scheme are outside, we have no right to describe it as insurance at all. The hon. Member for Ebbw Vale (Mr. A Bevan) said something on which he was challenged which I should like to repeat. He said that the working-people of this country would sooner have the 10d. per week contribution imposed on them, high as that premium is, than have it lowered at the expense of benefits to their fellow workmen. I want to subscribe to that view whole-heartedly.

I want to refer to the agitation behind the Amendments on the Order Paper, and I hope I shall not be accused of being unfair to my colleagues if I say that I do not think that agitation would have been anything like so strong had it not been that employers are affected equally with the workpeople. Employers' manifestos have contained the constant demand for a reduction in their contributions. There has not been from the trade unions, from the Trades Union Congress or from any responsible body of workpeople, a single demand for a reduced contribution. Since 1931 when the contributions were raised, there has been no demand from any section of the working-people to have their contributions lowered. Such a demand does not even come from non-political unions such as that presided over by Mr. Spencer. On the other hand, the Engineering Employers' Association through their leading officials have asked for a reduced contribution, as also have the Federation of British Industries and large bodies like chambers of commerce. I should not mind the agitation if it meant what used to be a part of the Labour movement's policy, namely, that the system should be non-contributory. If it became non-contributory, I would accept the employers' recommendation, but I see behind the agitation for smaller contributions a desire either to lower benefits or to keep benefits from being improved. The first charge on the fund ought not to be the lowering of contributions but the improving of benefits.

We argue wrongly that we have restored the cuts. We have not restored the cuts. We have given to those who are covered by insurance the amount of money that they formerly had, but that is not restoring the cuts. The number of people now covered by insurance is less by one-third than was covered in 1931. You are cutting down from 72 weeks' insurance benefit to 26 weeks. It means, in fact, that only those in insurance will have the cut restored. Those outside insurance are not safeguarded in that way. Consequently, you have restored the cuts only to those who are inside insurance. The Parliamentary Secretary nods his head. I am dealing with the point raised by the Amendment. We are restoring the cuts only to those covered by the 26 weeks, that is, those who came under what was formerly the normal practice, namely, 72 weeks or 30 stamps in two years, which allowed a person to draw benefit for 72 weeks. That means that the numbers affected are considerably less, and we have restored the cuts only to those affected by the 26 weeks. Other cuts were imposed on the working classes. The means test was a cut to them. It affected the amount of money received in a large number of cases, and was therefore a cut. So there were three cuts on the unemployed—the amount they received, the amount of standard benefit they received and the means test. We have restored only one out of the three cuts, and before we can talk of restoring the cuts to the unemployed we must restore the other cuts.

I want to challenge the Financial Resolution on other grounds. The chief case of the Chancellor of the Exchequer to-day was that of the £106,000,000, of which £6,000,000 has now been paid, at least two-thirds was accumulated on behalf of those receiving standard benefit. He did not tell us this, that it was standard benefit at that time but not standard benefit as we know it now. It was standard benefit for 72 weeks, not for 26 weeks. If we calculated it on the present basis it would not be two-thirds now, but much less, because the number now affected is considerably less, and I question whether one-third of the debt could be said to have been accumulated by standard benefit. The point is that the insured contributor may have taken on the debt and may have not taken on the debt. The debt was put on to the insured contributor without his having any say one way or the other. It was the House of Commons which fixed the debt, in succeeding Parliaments; it is not the Labour party or the Conservative party alone who are concerned, but all parties. Therefore, to me, the mathematical argument arising over one-third or two-thirds does not matter. The debt was contracted by Parliament putting it on to the fund, and Parliament ought to take it off the fund.

What the ordinary man or woman cannot understand is this : Great Britain has, for good or ill, cancelled chunks of debt all over the world. We have given chunks of debt to France, Germany and Italy. Even in this Parliament we have raised loans for Austria which will never be repaid. The ordinary man in the street asks, "How is it that all these countries can get their debts cancelled whereas I cannot get this debt taken off my back?" He says : "How is it that I see that under the Export Credit Scheme and other schemes great companies contract debts and nobody pursues them with the ruthlessness with which we working men are pursued?" He says "How is it that we do not insist on other countries paying their debts to us while our poor people are being asked to pay this debt to the last penny?" Those are questions which I find it difficult to answer. He says "I fought in the War, but I am taxed for this debt. If you had not paid the money to the unemployed you would have had disorder and have had to pay a police bill and a criminal bill. Seeing that it was an insurance premium for your whole social system, why am I left to pay it?" That is another question I have great difficulty in answering, because it was not so much an insurance scheme for the working man as an insurance scheme for the wellbeing of the State and the community.

He says, further, "Here is a new scheme brought in by a new type of Government, a scheme based, they say, on something like insurance conceptions, a scheme to a large extent wiping out the past and letting us start anew. Why, it the past is to be buried, are not the whole of the past debts buried as well?" I confess that I see no answer to that. These working men are paying their 10d. a week. We hear about the difficulties of the Chancellor of the Exchequer, and I do not under-estimate them. I often think that many of the Chancellor's own supporters are very mean. On the one hand they badger him to undertake expenditure and then go for him with vehemence if he dares to say that further taxation must be imposed. It shows very little consideration for their own Chancellor. These working people pay their 10d. a week, as the hon. Member for Wednesbury (Mr. Banfield) said, sometimes out of a wage of only £2 a week, and they do it with little grumbling. The Chancellor of the Exchequer cannot produce one resolution from working men asking for the contribution to be lowered, yet 10d. is a large contribution to take from them, even in the case of skilled men. In my own trade the wages of skilled men are about £3 1s. a week, and out of that they pay 10d. for unemployment insurance, 9d. for health insurance and 2s. to their union, plus infirmary contributions. Every week there is a tax of at least 4s. out of every £3 they earn, yet they pay, and they never grumble. But here in the House of Commons we hear rich men grumbling about 5s. in the pound for Income Tax.

The sacrifice which it is said we are asking of the Chancellor of the Exchequer is nothing to the sacrifice which the working people have made each week, and the Chancellor of the Exchequer might take the step we ask if only as a tribute to those men for the years of sacrifice they have made. I was not present when the Income Tax was discussed during the Budget Debates, but I read the discussion. Hon. Members were rising, the right hon. Gentleman the Member for Hillhead and others, to say what great difficulties we were facing, and of the need to reduce taxes. I have listened to Income Tax payers who are being relieved talking about their difficulties in regard to their school children. The ordinary worker who pays 2s. a week has difficulties greater than any of those people, and yet he has never complained. He has never said a word—not because the burden upon him is not great, but because he has felt that if he said a word it might be construed to mean that he was in favour of doing something wrong to his unemployed fellow-workers, so he has remained silent and paid the money. He has gone quietly about, and he will go on doing so.

The only thing he feels to be unfair at the moment is that the nation should not do something for him. He feels that the nation would do something decent if it wiped out this £100,000,000 of debt. [Laughter.] Hon. Members laugh. If we were talking of a foreign country, instead of our own people, who had said that they were not going to pay their debt, and had made trouble for us, hon. Members would find 100 excuses for wiping out the debt. If it were a rich company which had received export credits but had gone bankrupt, they would also find an excuse for wiping out the debt. I am not going into the export credits question, but hon. Members know that vast sums have been advanced. The workers say : "You would do it for those people; why not do it for us?" Is there anything deadly in it? I confess that I cannot find an answer.

I do not want to follow the hon. Member for Sparkbrook (Mr. Amery) in the word that he let slip, because I feel sometimes that it is unfair to pick up a thing which a man has said. I have said things which I would not like to have picked up. It was a remark which might be accused of unfairness, but, taking the basis of what the right hon. Gentleman said, it was that those men needed it. The men do not ask for it. They are asking for three simple things. Talk about employer's difficulties, what are their difficulties compared with the difficulties of the wife of an unemployed man trying to rear a child on 2s. per week? Their difficulties are trivial. Let them try to rear and give a decent life to a child on 2s. a week. Theirs are no difficulties. Their difficulties are nothing compared with those of the ordinary working fellow, who only wants three simple things. He desires the abolition of the means test, because he has seen homes broken up and cruelties imposed. He wants children's allowances increased, and he wants the benefits extended. If he gets those three things done, and the debt wiped out as a means of doing that, he will continue his payment of 10d. per week. He might find it hard, but he will go on paying with the knowledge that he is making a contribution and a sacrifice in order to make less fortunate people a little happier.

9.10 p.m.

Mr. HOLDSWORTH

There are two points which have been dealt with by the hon. Member for Gorbals (Mr. Buchanan) with which I desire to deal. I speak for myself and I cannot speak for my hon. Friends when I say that I came to the conclusion more than two years ago that we should be wise to change the insurance scheme into a non-contributory scheme. It is no balanced scheme when you have a three-tier system, in which you have a man 26 weeks upon a certain rate of benefit, then put him on Part II, and afterwards in other circumstances transfer him to public assistance. To say that you are operating an insurance scheme is, I think, a false claim. I do not think that this is the occasion to follow that line of thought, but it has some reference to one other point to which the hon. Member for Gorbals referred. Last week a very interesting Debate was opened by the Noble Lord the Member for Hastings (Lord E. Percy) upon the incidence of employers' contributions upon the burden of unemployment. I do not say for a moment that I would put a lowering of contributions before the raising of certain types of benefit, but there is a real point, which was made by the Noble Lord and also by the right hon. and learned Member for Hillhead (Sir R. Horne).

During my journey to London in the train to-day, I was speaking to a gentleman to whom I wrote last week asking him to tell me what he paid in employers' contributions in health and unemployment insurance. He sent me a letter telling me that the figure was £7,500 per annum. It is just as well that we should remember that that kind of thing is encouraging such men to employ workers upon overtime rather than to take on new men. It is a serious point. Like the hon. Member for Gorbals, I have no time for those who talk about doing away with the employer's contribution while still retaining the employe's contribution. The subject is well worth study, as it is affected by this Clause. The Clause not only takes on the debt of £115,000,000—or £106,000,000—but there is one very important provision in the Clause which I will read. It is : Provided that nothing in this subsection shall be construed as preventing the application, on the recommendation of the Unemployment Insurance Statutory Committee, of sums out of the fund towards the discharge of the said liabilities in addition to the instalments therein mentioned. The Chancellor has given absolutely nothing away this afternoon in accepting the Amendment moved by the right hon. and learned Gentleman the Member for Hillhead. Under this provision, when the £5,000,000 per annum is met, the remaining balance can be taken each year, if the Statutory Committee suggests it, to wipe out further blocks of debt. I should have liked to see those Members who put their names to the Amendment going much further and moving an Amendment to delete that particular thing. It not only affects the benefits of those who are drawing unemployment benefit, but it can very seriously affect any lowering of contributions, and provide an incentive to people to employ labour on overtime rather than take on new workers.

The gentleman to whom I was speaking said, "If I were to take on extra hands, I should have to get more machinery. I am not prepared to put extra capital into my business and take on more hands, and then", because I do so, be punished in the contributions which I make towards health and unemployment insurance. "On those grounds, I believe that the incidence of the contributory scheme makes against the taking on of extra men. As far as I understand—unfortunately, I did not happen to be in the Chamber at the moment when the Chancellor was making his speech—the only effect of what he has granted this afternoon is to extend the time for repayment. It does not seem to me that, so far as the Exchequer is concerned, those concessions are going to make one penny of difference. Personally, I think that this is one of the worst Clauses in the Bill. The debt was created, not by meeting contractual obligations, but by meeting extended benefits for uninsured people, and now this debt, created for uninsured people, is being put on to the insured people. Surely that is a very wrong thing to do. So far as I am able to see, children yet unborn will be called upon to pay this debt. I can see no logical reason why the subscriptions of those who are now in employment should be used to pay off debt which they themselves have not created.

All Governments have done this. Governments of the Conservative party and of the Labour party have continued payments to those who were not insured, and I suggest, accordingly, that this debt ought to have been treated as a national charge. What is being done is to shift the whole burden, which should be borne by the nation, on to a section—the employed section of the community. I cannot understand, and so far as I have been able to gather from the Debates there has been no adequate explanation, why the recommendation of the Royal Commission was not carried out. The Royal Commission suggested quite definitely that two-thirds of this debt should be taken over by the State. I do not know whether the Chancellor referred to it in his speech; if he did I beg his pardon; I am sorry that I was called out at the time——

Mr. LAWSON

You did not miss anything.

Mr. HOLDSWORTH

I am not one of those who are guilty of unfairness to the other side, even if they disagree with me. Many of the recommendations of the Royal Commission have been carried out in trying to make the Bill a workable Bill and in some respects to make the Unemployment Insurance Fund solvent, and I think it would have been much fairer from every point of view if at least two-thirds of this debt had been taken over. It would then have been borne by the general community, and it was the general community who spent it, through their Government representatives. Instead of that, those people who happen to be in employment, and therefore paying insurance contributions, are being asked to carry the burden of the unemployed for whom they have no responsibility. Personally, I shall not have the slightest doubt about going into the Lobby and voting against this Clause, and I am certain that, if a free Vote of the House were allowed on it, there would be an absolute majority for the recommendations of the Royal Commission being carried into effect.

9.20 p.m.

Major NATHAN

I am not so rash as to suggest that a Government is under any compulsion to accept the recommendations in the Report of a Royal Commission, but I think the House of Commons is entitled, when a recommendation is rejected, to have from the Government some explanation more convincing and satisfying than any that has been given in the course of these Debates. As I have listened to the Debates, I have been irresistibly reminded of an old legal maxim, that you cannot at the same time both approbate and reprobate a contract. You cannot, that is to say, take the benefits without accepting the obligations; or, conversely, you cannot be asked to accept the burdens unless you are also given the advantage of the benefits. That is not only a legal maxim, but is now a generally accepted axiom of everyday life. Here, however, under this Clause of the Bill, the insured unemployed are being asked to accept the burden of this debt without any possibility of ever deriving any advantage from that obligation. It is true, of course, that there may be some, their number increasingly few, who, at the time when the debt was incurred, had some advantage from it; but it is abundantly clear that, as the years pass, the obligation to repay this debt will fall upon people who not only had no part of the advantage, but were not even alive when the obligation was incurred. In ordinary life, whether a man will accept a burden or not is in most cases a matter for his own judgment, but in this case the obligation is placed compulsorily upon the insured without their having any possibility of reaping the advantage.

I am not suggesting for a moment that the sovereign authority of Parliament is not adequate to impose any kind of obligation upon every citizen, but time and again it has been said in the House of Commons, not merely in these Debates but over a long period of years—indeed, ever since the insurance scheme was first instituted—that, although not a contract, for Parliament cannot contract with any of its citizens, yet the insurance scheme is in the nature of a contract, imposing upon the State obligations which are of their nature contractual, obligations to find a certain amount of benefit in return for certain contributions paid. Nevertheless, in this case the implied contract has in effect been broken, or I would say, rather, is being broken, by placing upon the Unemployment Insurance Fund an obligation which has no relation to it regarded as an insurance fund.

The truth of the matter is that, just as this debt is not an obligation of the Insurance Fund, so it is no debt to the Treasury at all, but is in reality merely a convenient book entry—simply a writing in a ledger. The money was not raised from the lenders on the security of the fund; it was raised from the public upon the security of the national finances. No person who lent money which afterwards became included in this fund, wrongly, as I conceive, called the debt, looked to the fund either for repayment or for interest; he looked to the Exchequer, and exclusively to the Exchequer. So little did these lenders look to the fund that they did not know, and, in the nature of the case, could not know, the purpose to which the actual sums they subscribed were ultimately to be devoted.

The debt lies outside the province of insurance altogether. Even those who cling most firmly to the scheme of this Clause would not question that. The scheme in its essence contemplates insurance—perhaps not in any event a very apt term in relation to a scheme of this kind, but one that has become common form nowadays—against temporary unemployment and seasonal changes. It has been said time and again that the scheme was never framed with the intention of coping with prolonged or extraordinary unemployment, nor was it framed, in the form in which it is drafted, to provide maintenance. This so-called debt was incurred, not to implement the scheme in its integrity, but to meet the necessities of a situation created by what has so often been called the "economic blizzard." You can insure against showers, you can insure against storms, and I suppose you can even insure against blizzards. The point of the matter is, however, that, as far as this insurance scheme is concerned, nobody ever contemplated a blizzard, and the scheme was designed as an insurance against the showers of normal bad weather and not against the blizzard of an extraordinary season.

Such being the case, and the results of the blizzard falling, as they have fallen, upon the community at large, it falls to the community at large to meet those results, and not to leave the burden to be borne by one of its sections alone. Moreover, that section is under no legal obligation at all, except in so far as one is imposed by the book entry or by this Clause, and it is certainly under no obligation that has any moral backing. The Treasury would have had to find the money anyhow. It was not an obligation, it was not a fund which was found from the public purse as part of the Insurance scheme. The disaster of excessive unemployment overtook the country and imposed an inescapable burden upon the Treasury and upon Parliament to find the resources with which to combat it. The public Exchequer, in any case, would have been responsible. It simply happened that, while there was no other convenient machinery ready to hand, there existed in the Insurance Commissioners and the Insurance scheme a readily available conduit pipe through which the payment could be made. In most cases where there is a debt or a burden imposed upon third parties, there are some assets to represent the burden or the debt. Here there are no assets, for the fund simply passed through the conduit pipe.

The Chancellor of the Exchequer, for reasons which seemed good to him and to the Government, refrained from acceding to what I sincerely believe is the widely and deeply-felt wish of hon. Members of this House of whatever party, and of the country as a whole, that the burden should be taken by the Treasury and that the people of this country would willingly accept the additional responsibility. Yet only a week or 10 days ago, on the occasion of his opening the Budget, he placed in the hands of hon. Members a White Paper showing the very remarkable figures of the debts due to this country from foreign Governments which had either been remitted or, to all intents and purposes, written off. It is an odd thought that the Government should view—I will not say with equanimity, but at all events, without creating difficulties for the debtor, enormous sums of money borrowed from theis country, and yet fail to respond to the will of the House of Commons and of the country in regard to-this Debt. We have remitted reparations due under a solemn compact from the foe that was defeated, and yet the obligation which this Clause imposes upon the unemployed is itself in the nature of reparation, if not for the War, at least for the aftermath of the War. It is reparation resulting from the mistakes and the miscalculations, not of a section of the nation, but of the whole nation. Is it not rather a bitter thought that, while the foes who were defeated should be excused their payments of reparations, this obligation should still be imposed upon the victors and the sons of the victors?

9.32 p.m.

Mr. MACMILLAN

I rise only for a very few minutes, as one who took some part with my right hon. Friend the Member for Hillhead (Sir R. Horne) in the examination of this Clause, and held—and perhaps expressed—some views concerning it, to explain the attitude which I propose to take upon this question. The Chancellor of the Exchequer, in replying earlier in the course of the Debate upon the series of Amendments moved by my right hon. Friend, divided the case of those who object to the principle of this Clause into three categories. He said that they relied partly upon the recommendations of the Royal Commission, partly upon the character of the debt, and partly upon the desirability of reaching at an early date a stage when contributions could be reduced or benefits increased. He argued, as he always argues, powerfully and effectively against those views. I do not wish to embark at this stage of the Debate on a long or reasoned argument upon these points. I only wish to say that I remain unconvinced upon the merits of the case. I still hold the view expressed by many of my hon. Friends in the course of these discussions : that it would have been a wiser step had the Government decided to deal otherwise with the debt.

It is true that the use of a text of the Royal Commission rather as if it were some kind of Holy Writ has its advantages. It has often been the practice in this House to quote conflicting parts of these gospels for and against, and I have noticed that hon. Members usually pick out the parts which are on their side and omit to refer to the parts which are against them. Those who give a good deal of attention to the report of the commission do not base themselves solely upon that ground. There was a general feeling in the country that the sharing of this debt between the fund and the Treasury in some proportion would have been an equitable and a wise solution of the problem. With regard to the character of the debt, I think the right hon. Gentleman hardly did justice to the actual terms of the Royal Commission's observations upon it. While I agree with him that very grave misstatements have been made, and the case for a different view has been very much injured by misstatements, while admitting to the full that two-thirds of the debt was incurred in the paying of standard benefit, and not extended benefit, yet there is a considerable portion of the debt which was incurred in the paying of standard or contractual rates of benefit. Indeed, the Parliamentary Secretary to the Ministry only three months ago made the following observations on the Second Reading : One of the main reasons why the present insurance system got into financial difficulties and suffered so much public disrepute was that Government after Government went on paying men week after week and month after month money which they led the men to believe was contractual."—[OFFICIAL REPORT, 5th December, 1933; col. 1614, Vol. 283.] If distinguished Members of the present Government like to refer to the Debates that took place in December of 1930, Debates which the Chancellor of the Exchequer might be amused to refer to, they will see that the Foreign Secretary declared that in no circumstances could he conceive this debt ever being repaid. The present Minister of Health declared that it was hypocrisy for the House to proceed by way of incurring debt when everyone knew that no one ever meant to repay. However, these right hon. Gentlemen have no doubt changed their views. With regard to the desirability of reducng as early as possible the rates of contribution or increasing the benefits, I think it is admitted that it is all important, if we are to preserve the contributory system at all, that the rates of contribution should not be oppressive either to the employers or to the employés, and since under the structure of this Bill, so far as I can see, the main, if not the only, benefit to those who draw under Part I as against those who draw under Part II is that they escape the application of the means test, I think we must be careful that the rates of contribution are not higher than that slight gain would justify.

At the same time, although I know the Chancellor will not expect me to do anything except maintain the views that we have put forward, I want to say quite frankly, and with the knowledge that it may be regarded as weakness on my part—I do not think, whatever faults are attributed to me, timidity or sycophancy can be put down to me—having come to the House to-day with a strong determination, had the Government been adamant altogether, to vote against them, I shall not now record my vote against the Clause. After all, one has to be a realist to some extent. The Chancellor has met us upon the Amendments that we were able to frame within the terms of order, and we are grateful that he has been able to do so. At any rate, we were the only body of Members who succeeded in framing an Amendment within the terms of Order—on this Clause not a very easy thing to do. I recognise, of course, that the Government are not willing to consider the whole thing de novo involving, as it must, fresh financial Resolutions to the Budget and to the Bill, and a vote now would be nothing more than a demonstration. I am all for making a demonstration when you cannot get any concession, but, when you can get something, it is bad manners, as well as bad tactics in the hope of future concessions, not to accept it. I hope that hon. Members who have acted with us will take the same course in not dividing against the Clause.

9.40 p.m.

Mr. DENMAN

As one whose name was attached to the Amendments that were discussed earlier on, I should like to add my thanks to the Chancellor for the way in which he has met us. He was right in his inference that the Amendment expressed less than we desired. Of course, we wanted much more. We believe that it would be better that an appreciable share of this burden should be borne by the State. One argument that weighed rather specially with me was that the general National Debt is borne from year to year in ways that the Chancellor of the Exchequer of the day thinks fairest. He can always be adjusting the burden of the National Debt to meet the circumstances of the moment. By the method that we are adopting to-day we are placing that burden definitely for all time on a limited number of shoulders without really being able to foresee how they will be able to bear it in the future. That seems to me a very strong argument for placing at least a considerable portion of it on the National Debt.

But I fully recognise the force of the Chancellor's arguments on the other side, that in this year, in something on a transitional stage in our finances, we cannot lightly add to the burdens of the general taxpayer. I admit that this year that is an extremely forcible argument, and I freely accept it. My purpose in rising now is merely to say that, though in form we are accepting a solution which is valid for the whole period of this debt, I wish to reserve to myself and those who act with me the right to raise the matter afresh in future years. We cannot tell what the financial position will be a year hence, or later on, and there might be circumstances in which the Chancellor might revise his decision and be willing to transfer some of this burden to the National Debt. While accepting the concession, for the purpose of safeguarding my future action, I reserve full right to take what course I like in future years.

9.44 p.m.

Mr. KIRKWOOD

I have no desire to interfere in the quarrel between the Chancellor of the Exchequer and his supposed supporters, led by the right hon. Gentleman the Member for Hillhead (Sir R. Horne), because I have always held that, as long as the Unemployment Insurance Scheme is a contributory scheme, there will always be room for debate, and they can lead us into such a maze that we fancy that we are getting concessions when we find in the working out of it there is no concession for the working-class at all. If ever that was proved beyond the shadow of a doubt, it has been proved in the Debate on this Clause. Nothing will satisfy those benches short of the deletion of Clause 19. I am satisfied that there is no one better pleased than the Chancellor of the Exchequer at the ease with which he is going to manage to get the Clause passed. He knows better than anybody what is involved in this Clause. Ever since he came to this House, the Chancellor of the Exchequer has propounded the idea of decentralisation in every Bill with which his name has been associated. I heard him propound the idea of decentralisation in the first speech he made when he came to this House. It is the throwing back of the responsibility on to the community. He has done it in regard to education, he has done it in regard to the Poor Law and he is doing it here. He has always propounded the idea that the Unemployment Fund should be solvent.

The Chancellor of the Exchequer is not here dealing merely with pounds, shillings and pence. I readily admit that it is his job to look upon everything he does from the monetary point of view, but it is the responsibility of this House to see that the Chancellor of the Exchequer does not ride off on every subject from, a pound, shillings and pence point of view. There is a human side, and it is human beings with whom he is dealing here. It is not powerful America. It is not a question of, "We will see what we can do when we are a bit better off than we are to-day." It is not so with the unemployed. The fund has to be made solvent, and he says to the unemployed man and woman that after a certain length of time they are to be cut off.

Mr. MOLSON

May I interrupt the hon. Member?

Mr. KIRKWOOD

No. It might be thought that it was his own fault that a man was unemployed for six months or a year, or that he was a bad workman, but such is not the case. I wish the Government would listen to the voices from these benches which are in direct contact with those who are affected.

Mr. MOLSON

You set up a commission to make the fund solvent.

Mr. KIRKWOOD

Good workmen are unemployed in this country through no fault of their own. Why then should they be penalised? They are victims of the system, and of the idea of rationalisation in shutting down the workshops and scrapping the shipyards and the mines. Whole districts are becoming derelict. Is that the fault of the workmen? The Government have now appointed outstanding personalities upon whom the Cabinet, at all events, can rely, to go into these several districts and make inquiries to find out the actual conditions. It has been brought home to the Cabinet at last, that there are parts of this country that are becoming derelict. It is not simply the countryside or works that are becoming derelict, but human beings, the most valuable asset which the British Empire possesses. The youths and young men who, through no fault of their own, have never worked, are not criminals, but Clause 19 treats the men who have been unemployed for six or eight months as though they were criminals, instead of treating them with justice and respect. That is what we ask should be done, but the Chancellor of the Exchequer says, "We have paid out move to these folk than they have paid in."

The theory underlying his idea is that you cannot go on paying more out of the Insurance Fund than is paid in. It is true. I remember the speeches which the right hon. Gentleman used to make during the Labour Government when he always wanted them to get the fund solvent and on to an insurance basis, and now he is going to get it on to an insurance basis, but at whose expense? At the expense of human life and of increasing human misery. The House has no right to let the Chancellor of the Exchequer get away with this as easily as he is getting away with it. In fact, when he formulated the proposal he never dreamed that he would get it across the Floor so easily. This means driving the workers further down. There are no two ways about it. The Government attempted to find work for them, and discovered that they could not do it. They set up a new Department for the purpose of finding work for the unemployed. They did what they liked with the Government. The Prime Minister said that the right hon. Gentleman was one of the finest and ablest men he ever hoped to meet on this side of Heaven. After he had been on that tribune the Prime Minister dispensed with his services. [HON. MEMBERS : "Who was it?"] The Minister for Unemployment, the right hon. Gentleman who is now Dominions Secretary. The Government did away with the Department entirely. That was after they had used all their power and had got a free hand from this House to find work for the unemployed. They could not do it. Are we to sit calmly here after that? The unemployed are innocent.

We on these benches are satisfied that there is enough and to spare for everyone in this country, whether working or not. It is the business of the Chancellor of the Exchequer to find ways and means whereby those who are unemployed can live. Talk about his £30,000,000 of surplus. What does it mean? I was one of those who were delighted that the Chancellor gave a concession to the unemployed. But what does it mean? It means that the £30,000,000 was a miscalculation. Do not forget that. He may well "kid" the Tories that it is a surplus, but we know that it was a miscalculation. I know that it is a difficult task to say how much the taxes that are put on this and that and the next thing will produce. But that is the Chancellor's job. If he was in ordinary business, in a co-operative society or in our trade union movement, and this happened, he would be turned out, as a man who made such a blunder as to charge more than was required.

That is what the Chancellor did. That is all his surplus is; he simply charged more than he required. But not more than was required in the country. The section of the community that is to be affected by this Clause 19 the right hon. Gentleman was starving. Here was a section of the community that could have used that £30,000,000, had he given them the chance. This £30,000,000 that he has saved he has saved out of the stomachs of working-class children, out of the poor of the country—[Interruption.] Do not interrupt me for goodness' sake. This is no laughing matter for the folk who will be affected, for the unemployed who are up against it. You had a fine sample of it on Friday night, when one of my class, one of my constituents, Rankin, broadcast the story of an unemployed man's wife who was trying to rear a family of three, a man and wife and three children, on 33s. a week. That 33s. was all that stood between them and starvation. Yet hon. Members boast about this being the richest country on which the sun ever shone. I ask the Chancellor to reconsider the whole of the implications behind this Clause. It is going to act detrimentally to the people of this country. What does it matter if we save money? What does money matter if we allow our own flesh and blood, our own kith and kin, to deteriorate? Ill fares the land to hastening ills a prey, Where wealth accumulates and men decay. Men are decaying. It is an easy matter for the boys that are well fed in this House to laugh. [HON. MEMBERS : "You are well fed, too!"] Of course, I am well fed, and I look it. I am never ashamed to say that I am well fed. I do not hide myself behind the bushes or behind the party either. I appeal to the Chancellor to reconsider this Clause and its implications to the working classes. The reason why I was so pleased that he restored the cuts to a section of the unemployed was that I realised perfectly well that by raising the standard of the unemployed he was bound to raise the entire standard of the working classes. As long as the cuts were continued it was very difficult for us to improve the conditions of those who were employed and were just above the unemployed.

But this Clause 19 is going to worsen their conditions to such an extent that we shall do all that we can constitutionally to resist it. This is not the finish of this Bill. We shall vote against this Clause to-night, but the country, the constituents, the voters who have sent these Tories here, under whatever guise they may have come, national or otherwise, will ask them questions that they will not be able so easily to get over as they get over our questions tonight, by saying that they are quite satisfied that they have got some concession from the Chancellor of the Exchequer, or, as one of them said, that he is leaving himself free for the years to come. He intends to be here for years, but I do not think he will be. He is leaving himself free for the years that are to come, so that he can raise this question. The Labour movement will raise this question in the country in no uncertain fashion, so that when the first opportunity presents itself, either at by-elections or at a General Election, we shall turn this Government out.

10.7 p.m.

Mr. ARTHUR GREENWOOD

The Debate that we have had to-day goes to show that there is a certain uneasiness in all quarters of the House about Clause 19, and indeed, though many of us would like to have seen the whole Bill recommitted—I know I was making a very large demand, that would not be satisfied, when I asked for that—the fact that the Government agreed to the re-committal of this one of the many Clauses that were not discussed in Committee goes to show that they also were a little apprehensive as to the feelings of their own followers with regard to the position of the Unemployment Insurance Fund. I would like to remind hon. Members of the history of this question, because when we started unemployment insurance, shortly before the War, it was very limited and confined to a small handful of people. The War intervened before we had had any experience of its working at all, and in 1920, about 18 months after the War, the Coalition Government of the time felt bound, because of the menacing signs of unemployment then on the horizon, to make provision, as they thought, of a more or less permanent character for unemployment insurance.

That Act of 1920 was a leap in the dark. Nobody knew what would flow from it. The figures of contributions and of benefits, the waiting period, and the terms during which unemployment benefit could be drawn, were all purely arbitrary. It was a gamble with half-a-dozen unknown quantities. It was not insurance. It never has been insurance, as I have said on this side of the House many times; and from that time onward a debt has accumulated because successive Chancellors of the Exchequer have juggled about with the six unknown x's and added more unknown quantities—purely arbitrary. As has been pointed out today, there need have been no debt whatever on the fund if contributions had been trebled or quadrupled, if benefits had been reduced to a third or a quarter, or if the State contribution had been trebled, but, as a matter of fact, successive Governments, by determining their own values for the x, y, z's of unemployment insurance contributions, benefits and periods for receipt of benefit, have themselves contributed to the size of the debt. That is the history, and it is as much, in my opinion, a National Debt as that large sum which we know by that name.

What has happened to-day? The right hon. Gentleman has made a small concession, a very small concession. Our chief case is not with regard to the payment of £5,500,000 a year, absurd as we think that to be; our chief case is against the capital debt itself. The Government now are building up an annual surplus. In the last two years they have altered the x, y, z's, they have altered rates of contribution, they have altered the terms on which, and the periods during which unemployment insurance can be paid, and they have reduced benefits, and because of that, and because of the fall in registered unemployment, the Government are now building up an annual surplus. Yet, notwithstanding that and notwithstanding the very rapid rate at which the debt on the fund would be extinguished by this growing annual surplus, the right hon. Gentleman still sticks to his plan of this levy of, now, not £5,500,000 but £5,000,000 a year. That is all that we are getting out of him—half-a-million pounds a year, at no cost to the Exchequer. This is one of his many gestures. It is like the restoration of unemployment insurance benefits for those in receipt of standard benefit. This concession that he has made to-day does not call upon him for the contribution of a farthing of national funds for the aid of the unemployed. Either the right hon. Gentleman had this up his sleeve as a concession all the time, in order to throw it as a sop to satisfy the growing hunger for something real on the part of hon. Members who support the Government, or, on the other hand, it is an admission of the fact that the claims that we have made and that have been made on all sides of the House are justified. But it is hopelessly inadequate.

Other suggestions have been made, that the surplus which the right hon. Gentleman accumulated by his conservative estimates of last year might have been devoted to the reduction of the debt. The Royal Commission proposed that twice that sum, that two-thirds of the debt, should fall upon the Exchequer and only one-third upon the fund. The right hon. Gentleman's answer to that—in fact, it has been said by the hon. Member for Stockton-on-Tees (Mr. Macmillan)—was that people quote from the Royal Commission's Report those passages that are favourable to their own views. That is a human failing, but the right hon. Gentleman, while he has been prepared to swallow most of the Royal Commission's Report, when it comes down to this question of finance, which has not got direct repercussions on the Budget itself, but which has very serious repercussions on the standards of life of the unemployed and the employed workers, has not accepted it. We would go further and say that the right thing to do, in view of the history of the matter, is to regard the debt as a national obligation, created as the result of actions taken by successive Governments who have figured it out wrongly, or who were prepared to face a national debt rather than increase contributions, or reduce benefits, or make harsher terms for the receipt of benefit. We take that line because we believe, what the Government profess to believe, that unemployment ought to be a national responsibility.

When the Minister of Health first made his statement informing the House that the Government were prepared to make unemployment a national responsibility, that statement was received with the wildest enthusiasm on the part of hon. Members who support the Government. It was thought then that the term "national responsibility" meant that the whole burden was to be taken over by the nation as a whole. If the Government were being true to the principles on which they allege—I say "allege" advisedly—this Bill is based, they would have been prepared to take over as a national responsibility the debt on the Unemployment Fund. It is Hot as though this were a debt on an insurance fund; it is not. It is a debt on a fund which has been raised by compulsory contributions from a limited section of the people, to which the State has added its own contribution. It is not a fund which has fallen on the whole community in any justifiable proportions. The employer pays, the workman pays, and both of them again pay their contribution to what is paid by the State, but the people who are not inside the fund as employed persons under the Unemployment Insurance Act or as employers, are not paying a fair proportion of the charge. This accumulated debt of just over £100,000,000—so small in relation to the total population and wealth of the country, its annual income and its national revenue—might have been taken over definitely as a national responsibility.

The Statutory Committee is to be set up as the watch-dog of the Treasury. Its primary function is not to care for the unemployed but to make the Unemployment Fund solvent and to keep it solvent. I am not arguing now whether that function is right or wrong, but I say that the Government are deliberately harassing them in the task they have to perform by requiring as a prior charge, before any money can be paid to the unemployed, £5,000,000 a year for the redemption of the debt. It is, in a sense, crippling them to the extent of £5,000,000 a year in their handling of this problem for the next generation, if it lasts for a generation, which I am prepared to prophesy it will not. But he is putting upon the Statutory Committee the responsibility of finding this £5,000,000, and to that extent crippling them from either reducing contributions or increasing benefits. It is an attempt by a back-door method to stabilise the rates which have been established in the Bill. In one way and another the Clause keeps £5,000,000 out of the pockets of the unemployed population, not directly it is true, but by reducing the possible disposable surplus by £5,000,000 a year, which might have been used for increasing the rates of benefit for certain classes of persons, or reducing contributions. That money has gone.

The right hon. Gentleman in his Budget statement, not in the Budget, announced to the world that he was going to restore unemployment benefit so far as statutory benefit is concerned at a cost of over £4,000,000 a year. That, as I have said before, is tardy justice. It was right that it should be restored, but before the right hon. Gentleman decided to do that he had in effect made up his mind to take £5,000,000 there for the use of unemployed people, out of the fund in order to redeem the debt. We regard this concession as one of the smallest possible kind, a concession which does not deal with what we regard as the major problem. It would have been a real act of generosity with some substance in it if the right hon. Gentleman had taken over the responsibility for the debt on the fund. The Bill is intended to be a permanent Measure. It is the attempt of the Government to solve the problem of the treatment of the unemployed. I do not agree with it, but it is their solution. If they meant the scheme well, they ought to have sent it out on its way without a debt of over £100,000,000 hanging round its neck. It should have been given a fair start.

What would it have cost the right hon. Gentleman? It would have been well worth while for him to have utilised some of the large surplus which he disclosed to us a fortnight ago, in taking over the debt and making himself responsible, clinging, if he likes, to the principles of the Bill, for which he is largely responsible, but saying that he was going to allow the Bill to start with a fair chance. It is not for me to plead with the Government to give their own Bill a fair chance. My argument rests on the injustice of keeping this debt like a millstone round the necks of the workers, employed and unemployed, and of the employers for the next generation. There is no part of our National Debt so-called which is more creditable to the State than the debt on the Unemployment Fund. When I look at the debt of £7,000,000,000 which has been piled up for destructive purposes as the result of massacre after massacre and compare what this debt has done in maintaining the physique of our people, I say we ought to be proud to make this £106,000,000 a National Debt in the true sense of the term. We could do it financially. It is a flea-bite. It is a small sum relatively compared with the staggering debt which costs us three times as much every year in interest and redemption. This small sum might well he added to the National Debt, in honour not of those who lost their lives in the War and in the spending of that £7,000,000,000, but in honour of the survivors of the War who are suffering from the fruits of the War.

10.27 p.m.

Mr. CHAMBERLAIN

At an earlier stage the hon. Member for Chester-le-Street (Mr. Lawson) expressed some indignation because under a ruling given by the Chairman, I had, he said, answered in advance the speeches which he and his friends wished to make.

Mr. LAWSON

That was not the case. My point was that the right hon. Gentleman was allowed to go into things which were completely out of order.

HON. MEMBERS

Withdraw.

The DEPUTY-CHAIRMAN

The hon. Member must not make comments of this nature on the action of the Chair.

Mr. CHAMBERLAIN

Hon. Members have had plenty of time since and have taken full advantage of their opportunities to say all they wished to say, but, for my part, I feel that I need detain the Committee but a few minutes now, because I certainly do not consider that it would be any help to them if I were to repeat what I said earlier. I, therefore, confine myself to touching upon one or two of the points made in the course of the last hour. A good deal has been said which seemed more relevant to a discussion on whether an insurance scheme should be an insurance scheme or merely another form of handing out relief. The hon. Member for Dumbarton Burghs (Mr. Kirkwood), who is nothing if not emphatic, appeared to think that I was the author of the idea that the unemployment insurance scheme should be self-supporting. Perhaps he has forgotten that it was the Government of which the right hon. Gentleman the Member for Wakefield (Mr. Greenwood) was a Member which appointed this Royal Commission, with terms of reference which, I think, must have escaped his memory.

Mr. KIRKWOOD

Is that the May Committee?

Mr. CHAMBERLAIN

No, I refer to the Holman Gregory Commission on Unemployment Insurance. It was appointed to inquire into the provisions and workings 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. Those were the terms of reference drafted by the hon. Member's own Government. It was they who desired to make the scheme self-supporting, and it was the Royal Commission which they set up which made the recommendations which have been the subject of so much discussion to-day.

Mr. KIRKWOOD

That may be so, but has not the right hon. Gentleman been eternally hammering that into the House of Commons ever since he came to it?

Mr. CHAMBERLAIN

If the hon. Member thinks that by hammering away at that nail I convinced his Government and his friends, he gives me more credit for persuasiveness than I give myself. The contention has been put forward by several hon. Members that, as a matter of fact, all that this debt did was to pay for expenditure which in any case, if it had not been borrowed by the fund, would have had to be provided gratis by the State. If that be the contention, why did not the Government which was in office during the time, as the Royal Commission says, the greater part of this debt was being accumulated, provide for that expenditure out of voted money, instead of misleading the country and the House and those concerned with the Unemployment Insurance Fund by leading them to believe that by borrowing this money while times were hard, it would be repaid when times were good?

That argument will not do. At the time this money was borrowed the Government intended that it should be ultimately repaid. There were some, as the hon. Member for Stockton-on-Tees (Mr. Macmillan) reminded us, who expressed their doubt whether that payment would ever be made, but it was not the view of the Government. The Government did not accept that view. On the contrary, they maintained that this was in fact a loan and that it would have to be repaid in future. I have given my reasons why I still maintain the view that it is neither equitable nor fair to the taxpayer that he should be asked to shoulder this additional burden. I wonder whether it is realised how much the Exchequer has already done in this matter. In the years 1928 to 1933, whereas the contributions of employers and employed amounted to £163,000,000, the Exchequer contribution was £196,500,000; and the Royal Commission point out that during those years, while the burden upon the employers and employed was increased by one-third, the burden on the taxpayer was multiplied by no less than six times. It must be admitted, in view of those figures, that the Exchequer has been most generous and liberal towards the fund, and that it has constantly borne the major share of the burden upon the fund.

Although I am not able to accept the view which is held—and sincerely held, I know, by many of my hon. Friends—that some part of the debt should be accepted by the taxpayer instead of by the fund—I have endeavoured to meet my hon. Friends as far as I possibly could. Of course, the right hon. Gentleman the Member for Wakefield (Mr. Greenwood) says that that is a very small concession. A little while ago he said that £106,000,000 was a very small amount. Everything, no doubt, is relative. I suggest that the concession I have made is not a very small concession if you have regard to the size of the debt. It amounts to practically

one-tenth of the debt, namely, to between £10,000,000 and £11,000,000. That is, I suggest, a very substantial concession, and I am gratified to find that my hon. Friends have recognised that I have done what I could to meet their views, and that I have done something which will really help forward what they have in mind.

The hon. Member for Central Leeds (Mr. Denman) has reserved his right to raise this question some years hence. Nothing can take that right away from him but one circumstance, which I am sure we all hope will not happen, and, of course, it is possible that some successor of mine, some future Chancellor more fortunate than I am, finding the revenue flowing in and despairing of any means of distributing it, may, in a fit of generosity, say, "I will take over the rest of the unemployment debt"; and, if he can persuade the House of Commons to accept that point of view, the arrangement which is made in this Bill will be upset. But, as I say, that will be for some future Chancellor of the Exchequer to consider. I have to consider the circumstances of to-day, and as I conceive my duty towards the taxpayers I should not be doing my duty if I were to go any further than I have gone on this particular point.

Question put, "That the Clause, as amended, stand part of the Bill."

The Committee divided : Ayes, 270; Noes, 67.

Division No. 228.]	AYES.	[10.37 p.m.
Acland-Troyte, Lieut.-Colonel	Brown, Brig.-Gen. H. C. (Berks., Newb'y)	Dugdale, Captain Thomas Lionel
Agnew, Lieut.-Com. P. G.	Browne, Captain A. C.	Duggan, Hubert John
Albery, Irving James	Bullock, Captain Malcolm	Duncan, James A. L. (Kensington, N.)
Allen, Sir J. Sandeman (L'pool, W.)	Burghley, Lord	Eastwood, John Francis
Anstruther-Gray, W. J.	Burgin, Dr. Edward Leslie	Edmondson, Major A. J.
Applin, Lieut.-Col. Reginald V. K.	Butler, Richard Austen	Ellis, Sir R. Geoffrey
Apsley, Lord	Carver, Major William H.	Elliston, Captain George Sampson
Astbury, Lieut.-Com. Frederick Wolfe	Cayzer, Sir Charles (Chester, City)	Emmott, Charles E. G. C.
Astor, Maj. Hn. John J. (Kent, Dover)	Chamberlain, Rt. Hon. Sir J. A. (Blrm., W)	Emrys-Evans, P. V.
Bailey, Eric Alfred George	Chamberlain, Rt. Hon. N. (Edgbaston)	Erskine, Lord (Weston-super-Mare)
Baillie, Sir Adrian W. M.	Chapman, Col. R.(Houghton-le-Spring)	Erskine-Bolst, Capt. C. C. (Blackpool)
Baldwin, Rt. Hon. Stanley	Christle, James Archibald	Essenhigh, Reginald Clare
Baldwin-Webb, Colonel J.	Clayton, Sir Christopher	Evans, Capt. Arthur (Cardiff, S.)
Balfour, Capt. Harold (I. of Thanet)	Clydesdale, Marquess of	Everard, W. Lindsay
Barclay-Harvey, C. M.	Cobb, Sir Cyril	Fleming Edward Lascelles
Bateman, A. L.	Colfox, Major William Philip	Fremantle, Sir Francis
Beauchamp. Sir Brograve Campbell	Colville, Lieut.-Colonel J.	Ganzonl, Sir John
Beaumont, Hon. R. E. B. (Portem'th, C.)	Conant, R. J. E.	Gauit, Lieut.-Col. A. Hamilton
Bennett, Capt. Sir Ernest Nathaniel	Cook, Thomas A.	Gillett, Sir George Masterman
Betterton, Rt. Hon. Sir Henry B.	Craddock, Sir Reginald Henry	Gilmour, Lt.-Col. Rt. Hon. Sir John
Bllndell, James	Craven-Ellis, William	Gledhill, Gilbert
Boulton, W. W.	Crooke, J. Smedley	Glucksteln, Louis Halle
Bowater, Col. Sir T. Vanslttart	Crookshank, Capt. H. C. (Galnsb'ro)	Glyn, Major Ralph G. C.
Bower, Lieut.-Com. Robert Tatton	Croom-Johnson, R. P.	Goff, Sir Park
Bowyer, Capt. Sir George E. W.	Cross, R. H.	Goldle Noel B.
Boyd-Carpenter, Sir Archibald	Cruddas, Lieut.-Colonel Bernard	Goodman, Colonel Albert W.
Braithwaite, J. G. (Hillsborough)	Culverwell, Cyril Tom	Gower, Sir Robert
Broadbent, Colonel John	Davies, Maj. Geo. F.(Somerset, Yeovil)	Graham, Sir F. Fergus (C'mb'rl'd, N.)
Brocklebank, C. E. R.	Dawson, Sir Philip	Greene, William P. C.
Brown, Col. D. C. (N'th'l'd., Hexham)	Denman, Hon. R. D.	Gretton, Colonel Rt. Hon. John
Brown, Ernest (Leith)	Duckworth, George A. V.	Grimston, R. V.
Guest. Capt. Rt. Hon. F. E.	Mayhew, Lieut.-Colonel John	Shakespeare, Geoffrey H.
GuInness, Thomas L. E. B.	Mills, Sir Fredsrick (Leyton, E.)	Shaw, Helen B. (Lanark, Bothwell)
Gunston, Captain D. W.	Mills, Major J. D. (New Forest)	Shaw, Captain William T. (Forfar)
Gay, J. C. Morrison	Milne, Charles	Shepperson, Sir Ernest W.
Hacking. Rt. Hon. Douglas H.	Mitchell, Harold P.(Br'tf'd & Chiaw'k)	Shute, Colonel J. J.
Hammersley, Samuel S.	Mitcheson, G. G.	Simmonds, Oliver Edwin
Hanbury, Cecil	Monsell, Rt. Hon. Sir B. Eyres	Sinclair, Col. T. (Queen's Unv., Belfast)
Hanley, Dennis A.	Moore, Lt.-Col. Thomas C. R. (Ayr)	Smiles, Lieut.-Col. Sir Walter D.
Hannon, Patrick Joseph Henry	Morris, Owen Temple (Cardin, E.)	Smith, Bracewell (Dulwich)
Harbord, Arthur	Morrison, G. A. (Scottish Unlver'tles)	Smith, Sir J. Walker- (Barrow-ln-F.)
Hartland. George A.	Morrison, William Shepherd	Smith, R. W. (Aberd'n & Klnc'dlne, C.)
Harvey, Major S. E. (Devon, Totnes)	Moss, Captain H. J.	Somervell, Sir Donald
Haslam, Sir John (Bolton)	Muirhead, Lieut.-Colonel A. J.	Somerville, D. G. (Willesden, East)
Headlam, Lieut.-Col. Cuthbert M.	Munro, Patrick	Sopar, Richard
Heligers, Captain F. F. A.	Nation, Brigadier-General J. J. H.	Spencer, Captain Richard A.
Henderson, Sir Vivian L. (Chelmsford)	Normand, Rt. Hon. Wilfrid	Spens, William Patrick
Hope, Capt. Hon. A. O. J. (Aston)	North, Edward T.	Stanley, Rt. Hon. Lord (Fylde)
Hope, Sydney (Chester, Stalybridge)	Nunn, William	Stanley, Hon. O. F. G. (Westmorland)
Hore-Bellsha, Leslie	O'Donovan, Dr. William James	Stevenson, James
Hornby, Frank	Oman. Sir Charles William C.	Stones, James
Horobin, Ian M.	Ormsby-Gore, Rt. Hn. William G. A.	Storey, Samuel
Horsbrugh, Florence	Palmer, Francis Noel	Stourton, Hon. John J.
Howitt, Dr. Alfred B.	Peake, Captain Osbert	Strauss, Edward A.
Hudson, Capt. A. U. M.(Hackney, N.)	Peat, Charles U.	Strickland, Captain W. F.
Hudson, Robert Spear (Southport)	Penny, Sir George	Stuart, Hon. J. (Moray and Nairn)
Hume, Sir George Hopwood	Perkins, Walter R. D.	Stuart, Lord C. Crichton.
Hunter, Capt. M. J. (Brigg)	Petherick, M.	Sueter, Rear-Admiral Sir Murray F.
Hunter-Weston, Lt.-Gen. Sir Aylmer	Peto, Sir Basll E. (Devon, Barnstaple)	Sugden, Sir Wilfrid Hart
Iveagh, Countess of	Pike, Cecil F.	Sutcliffe, Harold
James, Wing.-Com. A. W. H.	Powell, Lieut.-Col. Evelyn G. H.	Tate, Mavis Constance
Jamisson, Douglas	Power, Sir John Cecil	Templeton, William P.
Jesson, Major Thomas E.	Procter, Major Henry Adam	Thomas, James P. L. (Hereford)
Jones, Lewis (Swansea, West)	Radford, E. A.	Thomson, Sir Frederick Charles
Ker, J. Campbell	Ralkes, Henry V. A. M.	Thorp, Linton Theodore
Kerr, Lieut.-Col. Charles (Montrose)	Ramsay, Capt. A. H. M. (Midlothian)	Todd, Capt. A. J. K. (B'wtck-on-T.)
Keyes, Admiral Sir Roger	Ramsay, T. B. W. (Western Isles)	Todd, A. L. S. (Kingswlnford)
Knox, Sir Alfred	Ramsden, Sir Eugene	Tree, Ronald
Lamb, Sir Joseph Quinton	Rankin, Robert	Tryon, Rt. Hon. George Clement
Law, Sir Alfred	Reed, Arthur C. (Exeter)	Turton, Robert Hugh
Law, Richard K. (Hull, S. W.)	Reid, Capt. A. Cunningham.	Wallace, John (Dunfermline)
Leech, Dr. J. W.	Remer, John R.	Ward, Lt.-Col. Sir A. L. (Hull)
Leighton, Major B. E. P.	Rhys, Hon. Charles Arthur U.	Ward, Sarah Adelaide (Cannock)
Lennox-Boyd, A. T.	Rickards, George William	Warrender, Sir Victor A. G.
Lindsay, Noel Ker	Ropner, Colonel L.	Waterhouse, Captain Charles
Little, Graham-, Sir Ernest	Rosbotham, Sir Thomas	Wells, Sidney Richard
Llewellin, Major John J.	Ross Taylor, Walter (Woodbridge)	Weymouth, Viscount
Lloyd, Geoffrey	Ruggles-Brise, Colonel E. A.	Whiteside, Borras Noel H.
Lumley, Captain Lawrence R.	Runge, Norah Cecil	Whyte, Jardine Bell
Lyons, Abraham Montagu	Russell, Albert (Kirkcaldy)	Williams, Herbert G. (Croydon, S.)
MacAndrew, Lieut.-Col. C. G.(Partick)	Russell, Alexander West (Tynemouth)	Willoughby de Eresby, Lord
MacAndrew, Capt. J. O. (Ayr)	Russell, Hamer Field (Sheffield, B'tslde)	Wills, Wllfrid D.
McCorquodale, M. S.	Russell, R. J. (Eddisbury)	Wilson, G. H. A. (Cambridge U.)
MacDonald, Malcolm (Bassetlaw)	Rutherford, Sir John Hugo (Llverp'l)	Windsor-Clive, Lieut.-Colonel George
Macdonald, Sir Murdoch (Inverness)	Salmon, Sir Isldore	Winterton, Rt. Hon. Earl
McKle, John Hamilton	Salt, Edward W.	Wlse, Alfred R.
McLean, Major Sir Alan	Sandeman, Sir A. N. Stewart	Womersley, Walter James
McLean, Dr. W. H. (Tradeston)	Sanderson, Sir Frank Barnard	Worthington, Dr. John V.
Manningham-Buller, Lt.-Col. Sir M.	Sassoon, Rt. Hon. Sir Philip A. G. D.
Margesson, Capt. Rt. Hon. H. D. R.	Savery, Samuel Servington	TELLERS FOR THE AYES.—
Marsden, Commander Arthur	Scone, Lord	Commander Southby and Dr. Morris-Jones.
NOES.
Acland, Rt. Hon. Sir Francis Dyke	Griffiths, T. (Monmouth, Pontypool)	Milner, Major James
Adams, D. M. (Poplar, South)	Grundy, Thomas W.	Nathan, Major H. L.
Aske, Sir Robert William	Hall, George H. (Mertnyr Tydvll)	Owen, Major Goronwy
Attlee, Clement Richard	Hamilton, Sir R. W.(Orkney & Zetl'nd)	Parkinson, John Allen
Banfield, John William	Harris, Sir Percy	Pickering, Ernest H.
Batey, Joseph	Hicks, Ernest George	Rathbone, Eleanor
Buchanan, George	Holdsworth, Herbert	Roberts, Aled (Wrexham)
Cape, Thomas	Jenner, Barnett	Salter, Dr. Alfred
Cocks, Frederick Seymour	Jenkins, Sir William	Samuel, Rt. Hon. Sir H. (Darwen)
Cripps, Sir Stafford	Jones, Henry Haydn (Merioneth)	Smith, Tom (Normanton)
Curry, A. C.	Jones, Morgan (Caerphilly)	Tinker, John Joseph
Daggar, George	Kirkwood, David	West, F. R.
Davies, David L. (Pontypridd)	Lawson, John James	White, Henry Graham
Davies, Rhys John (Westhoughton)	Leonard, William	Williams, David (Swansea, East)
Dobbie, William	Loftus, Pierce C.	Williams, Edward John (Ogmore)
Edwarde, Charles	Logan, David Gilbert	Wilmot, John
Evans, R. T. (Carmarthen)	Lunn, William	Wilson, Lt.-Col. Sir Arnold (Hertf'd)
Foot, Dingle (Dundee)	McEntee, Valentine L.	Wood, Sir Murdoch McKenzie (Banff)
Foot, Isaac (Cornwall, Bodmin)	Maclay, Hon. Joseph Paton	Young, Ernest J. (Middlesbrough, E.)
George, Major G. Lloyd (Pembroke)	Maclean, Nell (Glasgow, Govan)
George, Megan A. Lloyd (Anglesea)	Mallalieu, Edward Lancelot	TELLERS FOR THE NOES.—
Greenwood, Rt. Hon. Arthur	Mander, Geoffrey le M.	Mr. D. Graham and Mr. G. Macdonald.
Grenfell, David Rees (Glamorgan)	Mason, David M. (Edinburgh, E.)
Griffith, F. Kingsley (Middlesbro', W.)	Maxton, James

Bill reported; as amended (in Committee and on re-committal), to be considered To-morrow.

Clause 19, as amended (on re-committal), to be printed. [Bill 107 (1).]