HC Deb 01 July 1941 vol 372 cc1252-7
Mr. Rhys Davies (Westhoughton)

I beg to move, in page 11, to leave out lines 5 to 9.

The issue contained in this Amendment is one which I raised earlier on the Committee stage. Some employers have entered into an agreement with trade unions to make up in full the wages of any of their employés injured by enemy action if they have agreed to work during the alert. If an employéof such a firm meets with an injury, owing to enemy action and his wages nominally are £3 a week he would get say 30s. a week State compensation and the employer would make up his full wages by paying another 30s. a week for eight weeks. The amount paid by the employer to the employé in that case is not immune from taxation. The trade unions therefore feel that that is a form of penalty upon employers who are kindly disposed to their employés injured by enemy action.

I know that the right hon. Gentleman has one or two appropriate answers up his sleeve, perhaps about what the Liberal party did a century ago, and all the rest of it. I do not think however that any argument against the claim which I am making can be found as a precedent in any of the political history of the past, because the agreements concerned were entered into during this war. I hope that, as the right hon. Gentleman was good enough to deal with this point on the last occasion and to say that he would consider it, we may have some statement from him in terms more generous than are usual on Amendments of this kind. I wait with great interest to hear what he has to say, especially in view of the fact that representations have been made to him, I understand by the employers and the trade unions concerned, seeking whether he will modify his attitude on the Clause.

Mr. Leslie (Sedgefield)

I beg to second the Amendment.

I understand that, as a result of questions put to the right hon. Gentleman during the Debate on 16th June, he agreed to meet representatives of the trade unions and the Co-operative movement, and that the meeting took place yesterday. Perhaps he will let us know what happened.

Sir K. Wood

On the Committee stage of the Bill I undertook to make inquiries on this matter, and, in the interval I have, for the purposes of elucidation, seen representatives of the Co-operative societies and of the unions concerned. I have received two deputations on the matter. We spent a fair amount of time together, and one deputation was accompanied by one of my hon. Friends from the opposite side of the House and the other by my hon. Friend who moved this Amendment. We discussed the matter together and went into the circumstances of the case put by the deputation, and I stated exactly what the position was. I will now tell the House about it, so that it may be on record. A certain number of payments made by employers are covered by the Clause, while others will not be covered. I would remind the House of the reasons for the Clause. Some little time ago the Government decided to bring in a comprehensive improvement of the scheme of compensation for the benefit of civilians who might, unhappily, meet with injury because of operations arising out of the war and due to enemy action. I announced in the House some months ago a scheme which meant a considerable cost to the Exchequer and under which the State took upon itself responsibility for compensation, in the circumstances which I announced. The Government decided to give compensation which appeared, in the circumstances, to be fair all the way round. I announced the scheme, and it is now in operation and covers the whole of the civilian population.

Having assumed that responsibility, the State had to pay the bill for civilian compensation. While I expressed the view of the Government upon the merits of individual employers augmenting that compensation, I took up a very modest position, which I hope was accepted by the House, that the Government, having undertaken the expenses of the civilian scheme, should not be liable for any other payment at the instance of an individual employer. There is a good deal to be said for the view that, once the general compensation scheme has been set in operation by the State, there are objec- tions to individual employers giving extra compensation in certain circumstances. It may be argued, of course, that the State compensation is not sufficient, but hon. Members would not say so if they were Chancellor of the Exchequer. There is a great deal of objection to individual employers saying to employés, "If you will work during air-raid alerts, you will receive something extra in compensation."

The Clause prohibits the allowance, for any Income Tax purpose, of payments made by employers for the benefit of employers or their dependants who sustain injury by reason of the war. The Clause has two fields of operation. The first is in respect or payments made directly by employers to emplomés and dependants and the second is payments made by employers by way of premiums or contributions under insurance policies or schemes which provide for benefits to employés or dependants. The hon. Member's Amendment, moved no doubt for purposes of discussion, seeks to omit the first effect of the Clause. I have not received any representation or objection to the operation of the Clause. For the purpose of putting on record what I said to the two deputations that I saw, I only want to say this about the co-operative societies. There is nothing at all in this Clause which prohibits co-operative societies making payments. All this Clause says is that if they make payments which fall within the Clause, they shall not be allowed for Income Tax purposes. Having regard to the very large funds of the co-operative societies, it is only a very small sum which is at stake in this connection. The position apparently is this: The co-operative societies undertook in the case of employés injured in air raids while working during an alert to supplement the Government's compensation, for a period of eight weeks, by such an amount as would give the employés their full weekly wages.

Further, it appears that it has been the practice of the co-operative societies in the past to pay some of their employés, shop assistants, clerks, etc., full wages during sickness or ordinary disablement, but they have not made such payments to their manual workers. The arrangements they have made in respect of war injuries now cover both classes of employés, and as I explained to the deputation, the provision under the Clause, on the assump- tion that the arrangements were made after 2nd September, 1939, is as follows: As regards the classes of employés who in the past have been entitled to pay during sickness, the payments in respect of war injuries, if they do not exceed the ordinary sickness benefits, are excluded from the operation of the Clause by proviso (ii) to Sub-section (3), and will be allowed as expenses. If the war injury payments exceed the sickness benefit, only the excess will be disallowed under Subsection (4). With regard to the classes of employés who have not been in the past entitled to sickness benefit, if the arrangements provide only for payments in respect of war injuries, such payments, for the reasons I have given, would come within the Clause and would not be allowable as expenses to the employers.

Mr. Leslie

What is the position of firms and employers who in the past have been in the habit of paying full wages during sickness for an unlimited period? It is quite usual, particularly here in London, to pay up to six months, and where there is an agreement restricted to a lesser period it is an agreement either with the unions concerned or with the individuals. What is to be the position of such firms?

Sir K. Wood

I must not commit myself on an individual case without seeing the facts. I would refer my hon. Friend to the first statement I made, because it may be that such cases would come within the operation of the particular considerations I have laid down. I said, in regard to the classes of employés who in the past had been entitled to pay during sickness, etc., that payments in respect of war injuries, if they do not exceed the ordinary sickness benefit, are excluded from the operation of the Clause and consequently will be allowed as expenses for the employers. If the war injury payments exceed sickness benefits, only the excess will be disallowed. I cannot, of course, answer for a case I have not seen, but that is the general principle.

Mr. Leslie

There is no limited period?

Sir K. Wood

There is no limit in that respect.

Mr. Woods

I am grateful for the attention the Chancellor has given to the question, but I am afraid that time has not permitted us to make such full representa- tions to him as we should have liked to make. From his reply it is obvious to me that there is some little misunderstanding in his mind. It was one unit of a very large movement. I think the unit he had in mind represents about 60,000 men, whereas there are about 250,000 men affected. The organisation that supervises labour relationships was not represented, and it was therefore impossible for them to go into full details as to how exactly the situation had arisen. There are two or three considerations which I would like to submit to the Chancellor and which I think would justify him in giving further consideration to the problem with a view to introducing a modification, if necessary, in another place. It is a movement which has spread all over the country. Concessions were made, and before the war there were in operation various periods for which sick pay was available. They varied very considerably. There were further variations with regard to the types of employés, whether manual workers or otherwise, though it was not so much a question of manual or non-manual workers as of different trade unions each of which fought for the maximum concession and in various places secured it. As a result inequality arose.

A further problem arose because of the fact that up to the war most of the negotiations were carried on an area basis, and different areas concluded different agreements. I think the Chancellor will agree that it is entirely desirable that, instead of having all these differences, an attempt should be made to secure unification. What has happened has been that since the war there has been a consolidation, and national negotiating machinery has been set up. That is what has happened so far as the employers are concerned. On the other hand, with regard to the trade unions, there has been a considerable linking up in the negotiations, and prior to the coming into operation of the Budget an agreement was signed by the national negotiating machinery with the whole of the unions concerned. I will not trouble the House by reading out their names, but will let the Chancellor have the details afterwards. Now, therefore, there is a national decision which was arrived at with a number of unions, and if discipline is to be maintained, that will have to be operated by at least 1,000 employer units. Unless it is carried out on a basis that this would be an acceptable thing as with former experience with sick pay—it was conceded because of the general desire of the Government that industry should carry on—and made to apply compulsorily, I can foresee all over the country self-contained employing units that would normally say, "We will accept this and put it into operation," will refuse to put it into operation, and there is danger of a considerable amount of industrial dispute. If the Chancellor will review the matter I do not think there is anything in principle involved. That would then bring this agreement into operation, which is a continuation and unification of the practice that has been in operation beforehand. I would appeal to the Chancellor, in view of the lack of time and opportunity we have had of stating our case reasonably and clearly from the wages negotiating side, that he should agree to look at this further before it officially becomes law.

Amendment negatived.

Clause ordered to stand part of the Bill.