HC Deb 03 May 1934 vol 289 cc499-514

Amendment proposed: In page 5, line 35, to leave out the Clause.—[Mr. A. Bevan.]

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

3.46 p.m.


The Debate yesterday took rather a wide turn on the proposal to leave out Clause 5. I do not intend this afternoon to continue in the wider sense, but I want to deal with one or two matters arising out of the Clause. The Minister of Labour yesterday, in replying to the Debate, rather expressed surprise that any Amendment of this kind should be moved from this side of the House. He told us that on every possible occasion for more than two years we had pressed for the restoration of the cut in unemployment benefit. That is perfectly true. We have always felt, as we felt in 1931, that the unkindest cut of all was that inflicted on the unemployed. We never believed that it was necessary to reduce the unemployment insurance benefit to the people who were out of work, and the Amendment to leave out Clause 5 was not put down because we were opposed to the Clause. As a matter of fact we are in favour of Clause 5, but we think it is inadequate.

We are glad to see that the Government, at long last, have decided to restore the cut to the unemployed, or, at least, a portion of the unemployed, and I am certain that, whatever hon. Members may think to the contrary, there was general approval on the part of hon. Members in the House when the Chancellor of the Exchequer said, in the course of his Budget statement on the 17th April, that the unemployed should be considered first, and that, whatever might be the sufferings and hardships of those whose incomes had been reduced, their position would still be preferable to that of the unemployed, who had practically no income at all. But we were sorry to hear the right hon. Gentleman say that the cut had to start from the 1st July. We felt, and we still feel, that in common fairness and common justice to the unemployed, that restoration should have taken place earlier than the 1st July. The unemployed have been passing through extremely hard times, and we feel that it could have been made operative in April or May. Last night we were told by the Minister of Labour that the real reason why this restoration could not come into operation earlier than the 1st July was that, in the first place, it would need a new Bill; but I feel bound to repeat that, if a Bill were brought in in this House to restore the cuts either in May or in June, there would be no opposition to it at all from any section of the House. It would get through without the slightest difficulty. I do not think that reason is a sound one.

The other statement, that it would make it administratively impossible to pay back money because it would cause confusion in the Employment Exchanges, appears to be more of an excuse than a reason why the action should not have been taken. If there be a desire to do a thing, you can get it done and, if there had been a desire on the part of the Government to make this operate sooner than 1st July, I am satisfied that the Minister could have overcome all the difficulties. Is it possible for the right hon. Gentleman in consultation with the Chancellor of the Exchequer, or even with the Cabinet, to make the provisions of the Clause operate, say, either in May or in June? If that could be done, I am sure it would meet with general acceptance, and it would confer a real benefit on those in Unemployment Insurance. The right hon. Gentleman said yesterday that the effect of passing the Clause would be to give a man with a wife and one child 28s. a week as against 25s. 3d. The extra 2s. 9d. will be welcomed in the homes of the unemployed, but, when they have the full 28s., they will not have adequate maintenance, and men who have been out of work for three, four or five months are not able to meet all the liabilities of carrying on a home as most Members would like to see it carried on when regard is had to rent, rates, clothes and all that is required for a family. If the Government could see their way to make the Clause operate in May or June, there is no difficulty that could not be surmounted, and it would be conferring a real benefit on the unemployed which would meet with the full approval of all parties in the House.

3.53 p.m.


I want to reinforce my hon. Friend's arguments in favour of expediting the restoration of the cuts. I did not think the Minister's arguments against last night were very strong. Let me take him to something that is even more complicated than unemployment insurance—national health insurance. There are 17,000,000 workpeople within the national health insurance scheme, and 12,000,000 in the unemployment scheme. There must be tens of thousands of cases of benefit withheld under national health insurance, and moneys are accumulated in respect of those insured persons and the approved societies have to pay away accumulations on occasions up to £50. It is not uncommon too in respect of our other social schemes. Take widows' and old age pensions. It is quite possible on many occasions for a man or woman to apply for this benefit and for the claim to be held up for technical reasons sometimes for three, six or nine months, and the person entitled to benefit in the end receives it in a lump sum. Consequently, I do not see much honest argument against bringing back these payments to the date that we are now suggesting.


Hon. Members must realise that there is an Amendment down to this Clause in the name of the hon. Member for Chester-le-Street (Mr. Lawson) which proposes to leave out July and insert May, and that it was ruled out of order because it would create a charge. Now the hon. Gentleman is taking advantage of the Amendment to leave out the Clause in order to concentrate on the very Amendment that was ruled out of order. That does not seem to me to be right.


Will it be possible to discuss at ail the point that the Minister made himself, that it would need a money Resolution and a new Bill to go through all its stages in order to antedate this restoration?


The Debate last night was described by the hon. Member for Normanton (Mr. T. Smith) as very wide. I should have called it nearly all out of order. The Minister replied to questions put to him on the very Amendment that was out of order, but hon. Members must not concentrate on the Amendment when we are discussing the whole Clause. I believe it was laid down quite early in the Debate that it would not be permissible to deal with Amendments that were out of order except by way of reference.


I will only say that the-feeling throughout the country is very definite on the point that these proposals are unfair, inasmuch as they are going to be brought into operation in July whereas the Income Tax payer is getting 6d. off his Income Tax in April. May I touch upon one or two points which have not been raised before on these new benefits called standard benefits? The first thing that troubles me is where the word "standard" has come from in this connection. In relation to National Health Insurance, they are called statutory benefits, and those benefits are unalterable except by an alteration of the law. The different words must mean something to Ministers, and we ought to know exactly what. The right hon. Gentleman said last night that the Debate was very unreal and he twitted us with washing our dirty linen in public. I think the Tory party can compete successfully with us on that score, because the right hon. Gentleman the Member for Epping (Mr. Churchill) and the Secretary of State for India cannot agree among themselves on anything, and we find them quarrelling in the open from time to time. I will leave it at that.

Then the right hon. Gentleman on one point did not make himself clear at all. When we asked him to say—and I only mention this in passing—whether transitional payments would be equal to standard benefits, he rode off by saying——


Transitional payments do not arise on this Clause.


I come back to the real point at issue—that the people covered by these new benefits are to be put in a class of their own. They are, I am told, in spite of the restoration of the cuts, to be dealt with within a sphere of their own, and only a section of the unemployed will get the restoration of the cuts. I have followed some Debates on this Bill, and particularly on this Clause, and I am still in a quandary as to what proportion of the unemployed will be covered by the restoration of the cuts under this Clause. The hon. Lady the Member for Wallsend (Miss Ward) raised a question last night which, I think, was a little out of order, because she touched upon transitional payments. I think, however, that I am in order in asking what proportion of the total number of persons unemployed will receive the restoration of the cuts under this Clause. Will it be 25 per cent., 50 per cent. or 75 per cent.? The right hon. Gentleman knows exactly how many will get the restoration of the cuts, and I think, therefore, that we are entitled to ask that question.

I have said more than once that the Tory party is a very cute and clever party. When it wants a Minister to say nasty things in a nice way, it picks out the right hon. Gentleman to d oit. Last night, in saying that he was achieving a great thing, he said that they were in this Clause paying the highest rates of unemployment benefit in any country in the world Of course that is true, but then, this is the richest country in the world.

The MINISTER of LABOUR (Sir Henry Betterton)

What I said was that the rates of benefit restored by this Bill, having regard to the cost of living, were higher than at any stage in this country.


Really the right hon. Gentleman must not use that argument about the cost of living quite so glibly as he does, because he takes the average of the cost of living for the whole community. The cost of living must weigh more heavily upon a person with a smaller income than upon a person with a larger income. It is common knowledge that in the purchase of commodities the rich people buy their goods very much more cheaply than the poor people, because they can buy very large quantities at a time. [HON. MEMBERS : "NO!"] May I ask those who are not familiar with that kind of domestic economy to ask their wives, who will not deny what I have said. I repeat that you can buy a hundredweight of sugar more cheaply than you can buy it in separate pounds. I have been in this House for 13 years, and I never thought the House would be quite so ignorant.


May I ask the hon. Gentleman whether he knows of many houses where they buy a hundredweight at a time?


If rich people go about buying their sugar in separate pounds I do not think very much of their intelligence.




We cannot enter into a domestic discussion.


I can assure you, Mr. Speaker, that I want to keep in order. I say, therefore, that when we are restoring these cuts, the right hon. Gentleman is not entitled to argue about the cost of living as glibly as he does. The unemployed, owing to the fact that their income is so limited, must buy in such small quantities that the cost to them is higher than it is to people who are able to buy in larger quantities. It is commonly known that what we are doing in this country now is to turn the shop into a pantry. The people in receipt of small unemployment benefits can only afford to buy enough for their immediate needs. Might I ask, once again, that the right hon. Gentleman will be good enough to pursue that other point, which has been ruled out of order, by the way. I feel sure that if he desires to bring a Bill before this House to meet the arguments which we have put forward, and which are supported by voices and speeches on all hands, he will succeed. I am, however, old enough a politician and a Member of this House to understand that speeches from supporters of the Government are seldom put into concrete form in the Division Lobby.


If the hon. Member were by chance to move an intelligent Amendment, he might get some support. This Amendment is to leave out the whole Clause.


The trouble is that the hon. and gallant Member himself wants to determine what is intelligent, and any Amendment I might move would not be regarded so by him, although I regard everything he does as very intelligent. We are putting forward a very serious proposition, and we shall expect at about 5 or 6 o'clock the Minister to be good enough to stand up and give his reply to the proposal we have made, to restore the cuts very much earlier than is proposed in the Clause.

4.9 p.m.


I want to controvert entirely the assumption that the unemployed are better off now than they ever were. I totally deny that the rates of benefit, including the restoration, put the vast mass of the unemployed in a better position now than they were hitherto. The fact is that masses of our unemployed have not only used up their own resources, but have used up the resources of their friends. If hon. Gentlemen opposite would go down to their constituencies or to mine, where masses of men have been unemployed for a number of years, they would find that all the resources have been used up, and clothing and household things cannot be replaced. I remember being in one part of my constituency some time ago and being told there that even a frying pan was being used in several houses because it was impossible to replace anything costing a few shillings. As a matter of fact, the rate of unemployment benefit which has obtained for a large number of years has provided no margin at all for re-equipping the home. If hon. Members will go to some of these houses they will find that bed-clothes have been supplemented by newspapers to cover the bed to keep the people warm in the depth of winter, because they cannot, out of the rates of unemployment benefit, re-equip the home. I have read most of the memoranda and the inquiries conducted by the Royal Commission. One investigation was made into this very problem, and they came to the conclusion in their report that the poor were so poor that none could help each other, everything having been used up.

I, therefore, want to protest against the idea that the unemployed are better off now than ever before simply because of the restoration of the cuts. I think it will be agreed that in the past the unemployment rates of benefit were not regarded from the point of view of being a sufficient amount to keep these people. They were regarded as an assistance towards maintenance. I understand that the Government spokesmen have said that it did not necessarily follow that the rates of benefit in the past were sufficient to provide for all the needs of life. We know from our experience that they have not been sufficient, and, therefore, for the Minister to ride off by saying that they are better off now than they were, is totally untrue. I hope that I may be allowed to say that if the Minister would only consider bringing back the increase which is being made in the standard rates to May or June, these people would have some little lump sum whereby some of the actual needs for the re-equipment of the homes might be met. Not only would they be able to spend more money on food, but, speaking from my own experience—and I am sure hon. Members will agree—a few shillings of back pay, as it were, coming like this would be a god-send in thousands and thousands of homes.

I ask the Minister to look at the problem from that point of view, and not to indulge in a smug self-complacency. Do not let us think that, because these cuts are being restored to the degree they are, we are getting rid of the anxiety and meeting the needs of these homes. A great deal more than we are doing is needed to put the homes into anything like the standards they had before the great depression. I know in my own area, from personal knowledge, that homes have been depleted of the necessaries of life. Therefore, I am asking the Minister to look at the problem as a whole, and not to be satisfied with a mere statistical restoration, but to say that the needs of these homes demand that this should be done as quickly as possible.

4.30 p.m.


In making the fourth consecutive speech from this side of the House on this very issue one is tempted to ask whether Members in all parts of the House are fully satisfied that the Clause represents all that should be done in the circumstances, and whether they fully appreciate the full significance of what is being done? Questions were put last night to the hon. Gentleman the Parliamentary Secretary and to his Chief, and they were not adequately answered. The House has not been given a full explanation of the effect of the Clause now before the House. The language of the Clause suggests that very much more is being done than is actually the case. The Clause has been referred to by speaker after speaker, and by the Minister and the Parliamentary Secretary as the restoration of the cuts. The Clause says : As from the first day of July, nineteen hundred and thirty-four, article two of the Unemployment Insurance (National Economy) (No. 1) Order, 1931, and the Second Schedule to that Order shall cease to have effect, and benefit shall be at the rates in force immediately before the coming into operation of that Order; and so on. That gives the impression to the average man that the benefits are to be restored in full to the position at which they stood before the Economy Act was passed in 1931. That is an assumption which should not be allowed to remain in the House without some further explanation or more definite announcement. A declaration has been given that full restoration is to be given.


The hon. Gentleman cannot be referring to me. I would point out that I have not spoken on the Clause, and therefore he cannot attribute anything to me.


I have heard several speeches from hon. Members on that side and on that bench on that matter. In 1931 it was decided to try and make the fund self-supporting. After the Act of 1929 was passed, the contributions were not equal to the expenditure, and it was decided in 1931 that the fund should be made self-supporting and that the income should balance the expenditure. That could be done in two ways; by adding to the income or by reducing the expenditure. In fact, both ways were adopted. Under the Act of 1931 the contributions were increased and the benefits were reduced, and the period of benefits was reduced at the same time. By the passage of the Act of 1931 it was anticipated that an unemployment figure of somewhere in the neighbourhood of 3,000,000 might be carried; that contributions would be sufficient to carry a volume of unemployment higher than ever previously known in this country at approximately 3,000,000 persons. Happily those figures were never reached, though they reached a figure approaching that great total. In the last 12 months, to the very great satisfaction of the Government, and not to the displeasure of any part of the House or any body of people in the country, the figures of unemployment have been decreasing and the numbers of employed, and therefore of contributors, have been increasing in the same period.

The fund was to be made self-supporting by the enormous addition to the contributions. The contribution in respect of the person in employment in 1931 stood at the figure of 1s. 10½d. a week, or just less than £5 per annum for an adult person making the full contribution, but in order to provide Unemployment Benefit for the larger number in prospect, the contributions were increased by 33⅓ per cent., and the contributions in respect of each person rose from 1s. 10½d. to the record high figure of 2s. 6d. per week, which amounts to £6 10s. per annum. All the persons contributing are not male adult persons. There are some women contributors who pay less than the full contribution, and there are juveniles, but the average contribution, adults and juveniles, runs to nearly £6 per annum for each person employed. When we remember that the average number of persons in employment has not been below 9,500,000, and now stands at 10,000,000, we realise the enormous strength of this fund to which these generous contributions are being paid.

The Government made an estimate in 1931, which provided for the maintenance of benefit of a number of people as standard beneficiaries, derived from the total volume of 3,000,000 unemployed, but they over-estimated the depth of the depression and the volume of prospective unemployment, and as soon as the maximum figure of unemployment had been reached we found that the fund was more than sufficient to meet the demands upon it. Having shortened the period of standard benefits and reduced the benefits by 10 per cent., and having transferred a number of people from the responsibility of Part I of the fund to the responsibility of the Government in Part II, we found that the fund was more than adequate to meet all the demands upon it. The significant fact is that for the last 12 months the fund has been showing a large surplus week by week.

I will give the House the latest figures in order that they may know from whence the restoration is to come and the additional benefits are to be derived. I find in the Ministry of Labour Gazette for April, 1934, that there are in employment in this country 10,058,000 persons, which is the highest figure we have known for a considerable time, for twelve months at least. The contributions made in respect of those 10,000,000 people, made up of £19,600,000 paid by the employed people, £19,600,000 by the employers, and £19,600,000 by the Treasury, amount to nearly £60,000,000 a year. The fund is now making, because of the inadequate and imperfect estimates of the right hon. Gentleman and those responsible for the 1931 Act, a surplus of more than £1,000,000 a month which is not being absorbed in benefit. In addition to the higher contributions required, there is the return of prosperity, for which the Government take credit, and, if employment continues to improve, there will be an increasing number of people paying contributions at the higher level, thus adding to the surplus to which I have referred. It is not the Chancellor of the Exchequer of 1934 whom we have to thank for the restoration of the cuts, or the right hon. Gentleman with all his sympathy, but it is the fund itself. Something must be done with the surplus. The surplus demands that a higher benefit should be paid to all the people who are unemployed in this country.

We are not especially grateful to the right hon. Gentleman or to the Government for this restoration of cuts. We make the allegation here and now that there need not have been any cuts in unemployment pay. It was scandalous that in this country it should have been done. It will be a standing blot on this House that we condoned the thing after it had been done. We shall never be able to excuse ourselves for what was committed two or three years ago. The restoration which the Chancellor of the Exchequer says is costing £5,500,000 is not absorbing the whole of the surplus, and, if conditions do not change, he will have a greater surplus in his pocket for which he can find no use, unless he shows greater generosity than he is doing at the present time. Unfortunately, the number of people receiving transitional payments is greater than 12 months ago, and very much greater than two or three years ago.

Let hon. Members in all parts of the House remember that this concession has nothing to do with Part II. Part I stands independent of Part II. Part II has nothing at all to do with the fund. There is an opportunity for the right hon. Gentleman's generosity in Part II. He has no opportunity for generosity in Part I. Part I looks after itself. The Statutory Committee will determine what Part I shall be doing from time to time. What shall be done to improve the benefits and to lessen the contributions falls under the purview and authority of the Statutory Committee. The contribution fixed in 1931 was to last apparently for all time. There is an opportunity for the Statutory Committee. There is the surplus in Part I, which has now been made a very handsome sum of money, standing at the disposal of the unemployed. It has been collected from people in employment for the benefit of those who are unemployed. But under Part II, which is the part which falls directly upon the Treasury, all the support and assistance comes from the Treasury. The Government are responsible, except for a small contribution made by local authorities. Those who come for transitional payment will need to be sustained by the direct provision made for them by the Treasury. A little generosity from the Minister to these people will not be ill-placed. He need not go to the Treasury for one single penny. He can go to the fund and ask that the surplus now accruing shall be handed over to Part II so that the Public Assistance Board can administer transitional payments at a higher level, and not with the destitution test that has been established since 1931.

If we are to have restoration of the conditions of 1931, let the Government say so. Let them bring forward a Bill with that object to-day, to-morrow, this week, and we promise on this side of the House that there shall be not one word of opposition offered, and not one minute's time lost in obstructing the Bill. We will accept it and acknowledge it, if the Government will give to the unemployed people on standard benefit and on transitional payment, without distinction, a restoration of the position of 1931. If they will not do that, then let us here and now face the situation. Do not let us pretend. Let us fight out the issue at the by-elections and at the General Election. We complain that the unemployed are not being treated generously. We offer that as a challenge to hon. Members. Why perpetuate the injustices imposed in 1931? If the Government wish to remove those injustices and not to condone them, let them do so, and then they can go to the by-elections and speak with freedom. Let the Minister bring forward a simple, practical straightforward Bill to restore in full the cuts and to restore the conditions that prevailed in 1931.


Are we not to have an answer from the Government in reply to the case made by the hon. and gallant Member for Gainsborough (Captain Crookshank) and others?

4.33 p.m.


I did not want to intervene until I was sure that all the hon. Members who wished to speak had done so. I do not wish to detain the House very long, except to answer a few of the points that have been made this afternoon. The hon. Member for West-houghton (Mr. Rhys Davies) is not in his place, but no doubt someone will tell him of my answer. He asked if I could give any estimate of the numbers of people who will benefit by this Clause. It is obviously impossible to make any exact estimate, but in the Second Reading Debate I gave a figure of 87 per cent. of the total insured population who would have the whole of their unemployment risks in the year covered by the insurance scheme when the Bill goes through. The whole of those persons will benefit by this Clause. In addition, there will be an indeterminate number of other persons who will benefit, but what the exact figure will be it is impossible to say.

The hon. Member also called in question a statement of my right hon. Friend yesterday that the new rates of benefit under the Bill were very substantially in excess so far as purchasing power is concerned over the rates in existence in 1831, and he went on to justify his criticism of my right hon. Friend's figures by pointing out that the poor cannot purchase on such advantageous terms as the rich. His conception of the well-to-do man's purchases caused a certain amount of amusement. His criticism was entirely misconceived, because the Ministry of Labour Cost of Living Index, on which my right hon. Friend's calculations were based, is the result of investigation into working-class expenses. Therefore, the hon. Member's criticisms were entirely out of place.

I cannot allow the speech of the hon. Member for Gower (Mr. D. Grenfell) to go without some comment, because, unknowingly, it was full of inaccuracies. He started by saying that in 1931 we set out with the intention of making the Unemployment Insurance Fund solvent and self-supporting. His dates were a little wrong. That was done by his Government in December, 1930, when they set up a Royal Commission with that object as one of its terms of reference. The present Government, in 1931, by the Economy Order did not profess to make the fund self-supporting. They took steps to try and see as far as possible that the fund should balance.


That is the same thing.


It is not the same thing. They made provision for the case, which was foreseen, of the fund not balancing. They allowed the debt to increase up to £115,000,000, but they provided that when the debt was in excess of that figure any deficiency should be made good by the Treasury. That is a very different matter from making the fund solvent and self-supporting. The hon. Member went on to say what had happened since. Any hon. Member listening to him might have been under the impression that the whole of the advantageous circumstances in which the fund now finds itself are due to the increases of contributions levied on the workers. He said that the rates of contribution were unexampled in history. That is not so, because on previous occasions since the War the rates of contributions have been in respect of certain parties as high as they are at the present time. Without meaning it, the hon. Member gave a totally wrong impression. The rates of contribution have been as high in the past.


indicated dissent.


The hon. Member shakes his head. He will find the full figures in paragraph 28 of the Royal Commission's Report. In 1921, the employer's contribution was as high as 10d. Therefore, the contribution has been as high in the past as now. The only novelty in the present circumstances is the exceptionally high rate of contribution paid by the Exchequer, and I suggest that one of the reasons for the present flourishing state of the fund is not the increased rate of contributions paid by the workpeople and the employers but the high and unexampled rate of contributions by the taxpayer. In addition to paying these exceptionally high rates the Exchequer has also paid in the last two years considerable sums on account of the deficiency in the fund. The debt amounted to £115,000,000 in 1932 and between March, 1932, and the time when the fund started to balance the Exchequer made very considerable payments into the fund by way of deficiency grants. All these things have to be taken into account when we are considering how it is that the fund is in its present position.

The hon. Member also said that we were not making use of the whole of the existing surplus for the benefit of the unemployed. He suggested that the surplus amounted to £12,000,000 a year and that as the concession will only cost £4,000,000 we are left with a surplus of £8,000,000 a year. He has forgotten that in this Bill the unemployed are being granted very considerable concessions in addition to the increase in the rates of benefit. They are being given the concession of additional days of benefit, and those additional days of benefit are calculated to cost in a year something like £8,350,000. Therefore, they have not merely a concession in the increase in the rate of benefit but a very valuable concession as to the period during which they can draw benefit, and that will absorb the whole of the surplus.


No. The Bill was based on an unemployment figure of 2,500,000. The hon. Member prides himself on the fact that the unemployment figure is now 2,250,000. The surplus is greater than he bargains for.


I am showing how inaccurate the hon. Member was. He said that we had a surplus of £1,000,000 a month, or £12,000,000 a year. The fact is, that the new expenditure is in excess of £12,000,000 a year and that we shall be spending at the rate of more than the whole of that surplus. If any additional surplus arises then it will be open to the Statutory Committee to suggest means of disposing of it, whether by increasing benefits or reducing contributions. Far from taking the surplus for our own purposes we shall have distributed practically the whole of the surplus that has accrued this year, and if any other surplus accrues it will be at the disposal of the Statutory Committee.


Will the hon. Member deal with the point as to whether the Clause can be made to operate sooner than the 1st July.


Mr. Speaker said that that would be strictly out of order. My right hon. Friend referred to that point last night.

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