HC Deb 15 December 1948 vol 459 cc1334-44

Motion made, and Question proposed, That the Draft National Insurance (Compensation) Regulations, 1948, a copy of which was presented on 29th November, be approved."—[Mr. Steele.]

10.17 p.m.

Mr. Richard Law (Kensington, South)

These draft regulations fulfil the pledge which is in Section 67 of the National Insurance Act, that the full-time employees of approved societies and so on will receive adequate compensation for any loss they may suffer as a result of the Act. On the whole, the draft regulations do seem to be a reasonable fulfilment of the undertaking in the Act. However, there are one or two points on which I would seek enlightenment, and there are one or two points where, I think, the regulations could be improved.

The first point to which I would direct the attention of the Minister is Regulation 7, in which it is laid down, No compensation shall be payable in respect of a loss of less than two and one half per cent. of a claimant's net emoluments or a loss of pension rights less than those derived from two and one half per cent. of his net emoluments. It is very difficult to see why that limit is set. The only conceivable reason that I can think of is that the administrative burden of settling small claims of this kind would be so great as to be unjustified. If that is the argument, I suggest to the Minister that the administrative burden really arises out of the inquiry and not the settlement, and that, as the inquiry has to be made in any case, it is very difficult to see why compensation cannot be made even for a small amount, if compensation is due.

The next point that I should like to put to the Minister arises out of Regulations 12 and 15. Regulation 12 deals with the conditions under which interim compensation may be awarded, and Regulation 15 with the conditions under which permanent compensation, if that is the right phrase, can be awarded. Under both these regulations the Minister has to consider whether the claimant has unreasonably refused alternative employment. I do not think that any one would dispute the merits of that provision. Obviously, if a claimant has unreasonably refused alternative employment he ought not to get compensation. What I do not think is clear from the regulation is, what, in fact, constitutes an unreasonable refusal? Paragraph (7) of Regulation 12 lays down that, …. regard shall be had to the duties and conditions generally applying to persons in the rank or grade in which employment was offered to the claimant …. That would seem to imply that if a claimant was offered duties out of keeping with his previous grade and experience and capabilities he would not be unreasonable if he refused such employment. However, then it goes on to say that, … . it shall not be deemed to be a reasonable ground for refusing alternative State employment that he would have been required to perform different work from that which he formerly performed …. It is not very clear—to me, at any rate—what under that paragraph reasonable grounds for refusing employment would be, or what would be unreasonable grounds. There is another matter of doubt in the same paragraph. If the claimant is required to transfer to some other place of work in Great Britain the refusal to do so would be deemed to be unreasonable. I think the House will agree that it would be unreasonable, but if, on the other hand, a claimant is obliged to transfer to some other part of Great Britain, is there any provision made for his refusal because he received no compensation for the cost of removal, which might be very great indeed?

There is one other point that arises out of Regulation 12. Under this regulation interim compensation is paid and shall continue for three months. I assume that the purpose of interim compensation is to hold the gap, as it were, until the permanent compensation has been assessed. Under Regulation 13, The Minister shall, as soon as practicable, fix the amount of permanent compensation. What puzzles me is what happens if the three months have expired and it is not practicable to fix the amount of perman- ent compensation. Is the claimant just left in the air?

Finally, there is one point of substance on the question of superannuation. I think that some of the approved societies had superannuation schemes that made provision for the widows and dependants of their employees, but as far as I can make out, there is no such provision in these draft regulations. Am I right in that, or is it possible that some provision is made under Regulation 24 in regard to the discretion of the Minister to award lump sums? I should be grateful if the Minister could give us some information on the points I have raised.

10.23 p.m.

Mr. Molson (The High Peak)

I agree that these regulations have been broadly agreed with the representatives of those concerned, and that they are satisfactory to them; therefore, they are naturally satisfactory to me. At the same time, I think the Parliamentary Secretary will agree that these regulations are not easy to understand. He has had the advantage, if it could be so described, of having gone through the Bill with them, and has almost cohabited with them for a number of weeks and months past. Perhaps there is advantage in hearing of the difficulties that come from a completely fresh mind that has considered these regulations for the first time and has tried to visualise how they will work out. There are, therefore, a number of questions I should like to ask, and it may be of advantage to those affected by the operation of these regulations if an explanation from the Minister is on record.

In the first place, in the explanatory note to which we turn in the hope of understanding the draftsmen's phraseology, we find reference to 5th July, 1948, which was the appointed day for this new legislation to come into effect. When we turn to Regulation 2, we find two periods during which a claimant for compensation can refer as periods in which he was employed, and no reference to the appointed day. I should like the Parliamentary Secretary to explain how it is that these two periods are related to the appointed day, which is referred to in the explanatory note.

In the second place, I wish to ask why these particular periods, from 5th July, 1940, to 31st July, 1946, and from 1st August, 1944, to 31st July, 1946, have been selected for this purpose. I am sure it has been done in order to enable different categories of workers to base their claims upon a period when they were in work, but, on the face of it, it is not apparent why these periods that are not consecutive have been chosen.

Then we come to Regulation 2 which says in paragraph (1,a), on the question of employment: by an approved society or by some other body … administering the affairs of an approved society. I do not know what other body would be administering the affairs of an approved society, because, as I understand it, under the National Health Act, 1911, approved societies were separated from the friendly societies. I am not clear at all as to what other bodies then would administer the affairs of an approved society if it were not, in fact, an approved society.

In the third place, under Regulation 2 (1, b) it is provided that a claimant to be successful must have attained the age of 18 years before 5th July, 1940. That would appear to suggest that no one can successfully apply for compensation who is now less than 26 years of age. Although it may well be the case that most of those who were as young as that could have obtained alternative employment, I do not understand why there should be this arbitrary limitation of the age at which claims for compensation can be met. Then we come to Part III, and in Regulation 8 (4,d), which deals with war service, we find this: any full-time employment into which a person entered by direction of the Minister of Labour … One naturally asks oneself what is the position with regard to a person who is not directed by the Minister into particular labour but went there as a volunteer. Possibly the answer to that is covered in Regulation 8 (4, f): such other employment as the Minister, with the consent of the Treasury, approves in writing. It is a matter of some importance and I hope the Parliamentary Secretary will deal with it. The whole of Part IV deals with interim compensation, and I should like to know how interim compensation dovetails into permanent compensation, which is the principal provision of these regulations. This is very much the point made by my right hon. Friend the Member for South Kensington (Mr. Law).

I go now to Regulation 16 (1). I am bound to say that the drafting here is extremely obscure. It says: Provided that the said annual sum shall not exceed two-thirds of the amount by which the annual rate of the claimants emoluments after the loss or diminution"— I leave out the parenthesis which goes to four lines and then reads: falls short of his net emoluments. I have tried to understand this regulation, and I think what it means is that the annual sum shall not exceed two-thirds of the total loss which he has sustained as a result of the passing of the Act. One has to turn back to the explanatory paragraphs to find out the meaning of the words "rate" and "amount" I am inclined to think that for this purpose the word "rate" refers to salary and "amount" to gross emoluments. Perhaps the Parliamentary Secretary will be good enough to deal with that point, because it is obviously one of some importance.

Regulation 19 deals with the position where the Minister is satisfied that the applicant would have continued in work beyond a normal retiring age. It is important to know how the Minister is to answer that somewhat hypothetical question of whether a claimant would have continued in employment after retiring age if the principal Act had not been passed. Regulation 20, which has already been mentioned by my right hon. Friend, deals with superannuation. In some of the schemes that were put in operation by the approved societies there is provision for widows and dependants, while there is no such provision in Civil Service superannuation. What happens in the case of the widow or dependant who, if the Act had not been passed, would have benefited under the superannuation scheme of an approved society, but who, under the Civil Service regulations could not benefit. Would it not be possible for something to be paid under Regulation 24?

Finally, I come to Part V, where provision is made for appeal to a tribunal. Nowhere in these regulations have I been able to find anything about the constitution of that tribunal, nor do they give power to the Minister of National Insurance to set up a tribunal. I have no doubt that they are set up under some other regulations or maybe under the principal Act, but it is not clear to me how under these regulations, an appeal can be made to the tribunal when the tribunal itself and its powers are not defined. Those are the points which do not seem to me to be clear at the first reading of these regulations.

10.33 p.m.

The Parliamentary Secretary to the Ministry of National Insurance (Mr. Steele)

I shall do my best to answer the questions which have been raised. I certainly agree with the hon. Member for The High Peak (Mr. Molson) that the regulations are fairly complicated and technical. It should be borne in mind, of course, that my right hon. Friend appreciated the difficulties and the problems involved in integrating the staffs of the approved societies into the Civil Service. Accordingly, he set up a committee, with 14 members from the trade unions and 14 from the approved societies, to examine the question and they made a report on these compensation provisions. These regulations embody the recommendations of this advisory committee.

In regard to the first question raised by the right hon. Member for South Kensington (Mr. Law), it is correct that we have limited compensation in cases where there is only 2½ per cent. loss. It was thought that this was so small that, for administrative and other reasons, it was not worth troubling about, and with that the Committee agreed. The right hon. Member also raised, on Regulations 12 and 15, the question of unreasonably refusing an alternative job. Frankly, it is very difficult to define what an unreasonable refusal would be. It must be determined on the facts of each case. We ask the person concerned to register at the Ministry of Labour or keep in contact with the appointments board. and we are generally prepared to accept what might happen.

The question of paragraph (7) of Regulation 12 about different work requires that it should be appreciated that the staff of the approved societies were all doing one kind of job. When they come into the Civil Service there are different functions for them to perform. It would normally be reasonable for a person who was working as a clerk for an approved society to be offered an inspector's job which might entail his going out and doing work outside the office. That is what we mean by that regulation.

On the question of interim compensation, and what would happen if we had not been able to assess compensation at the end of three months, I must point out that actually the first three months is not paid as compensation. It is a maintenance allowance to ensure that there is no hardship until such time as the position has been examined. The three months will give us an opportunity to examine the position and make what is called a conditional assessment. That conditional assessment, in the case of a person who does not come into the Civil Service, will last for two years. Within that period, if a change of circumstances should take place with the result that a person's position might be worsened, the case can be looked at again, and it will only be after two years that a final decision will be made.

Mr. McCorquodale (Epsom)

How does the three months come into it?

Mr. Steele

At the end of three months we come to the first assessment so far as conditional assessment is concerned. We allow a period of three months in all those cases to give us an opportunity to go into all the facts, because it should be borne in mind that compensation does not only cover mere salary; it is for other things as well, such as travelling privileges and many other emoluments. Therefore, we have the period of three months which is really not payment for compensation at all, but merely a maintenance allowance to allow us to get the facts for the first assessment.

The hon. Member for The High Peak (Mr. Molson) raised a point on Regulation 2 in connection with administering the affairs of the approved societies.

Mr. Molson

Would it not be more convenient since the hon. Gentleman is dealing with this point, to deal first with exactly how these things dovetail in. I am not sure how the permanent compensation dovetails in with the interim compensation.

Mr. Steele

A person who has been working with an approved society makes an application. To cover the period of the first three months, on that application we have what is more or less a maintenance allowance. During those three months the conditions are assessed, and then he is awarded conditional compensation. That conditional compensation can be altered on a change of circumstances at periods of six months, if the individual so desires, or he can make an appeal to the Minister to have it altered if the change of circumstances is against him, even before the six months has elapsed. At the end of two years he then comes up for a final award. The final award which is then made is not altered. We feel that it is better to get finality in that regard. We do not want a person going on from month to month wondering just what his compensation position may be. Let me explain that, first, we have the three months, and then the period of two years in which the conditional assessment can be altered if there is a change of circumstances; and at the end of two years, comes the final award.

Mr. Molson

Could the hon. Gentleman say exactly where this is found in the regulation? Just where does the two years come in? I still cannot find it.

Mr. Steele

I will come to that. The other point which the hon. Gentleman raised was on Regulation 2 about a body administering the affairs of an approved society. These are words taken from the Act itself, and they are intended to cover approved societies in connection with trade unions and other bodies where the parent body used the staff to undertake the work of both the trade union and the approved society as well; and that, I understand, is what these words are intended to cover.

The hon. Gentleman asked me about the dates and why 5th July, 1948, was not included in this part of the regulation. It is included in Regulation 2 (1, b) where it will be seen that we indicate that the person must have been in a period of employment from 5th July, 1940, until the appointed day. In the Act itself, Section 67 says quite clearly that the compensation dates must be related to the period before the commencement of the Act and, therefore, it was essential for us to use 31st July, 1946. We have used that date. The reason we have these two periods is that many of the staff of the approved societies were utilised by the parent bodies in so far as some of the work might be with the approved society section, and some also in the private side of the society; and what we have done in this regulation is to give two periods whereby it can be considered whether they were wholly or mainly on approved society work. This gives them the opportunity to qualify under one period, or if not, under another.

The other point raised was why we have limited compensation to those persons who are over 25 years of age. The answer is that the compensation is really for people who are not able to fit in to another form of work and, consequently, it provides for the older people. I think the House will agree that compensation should not be considered for young people, and the purpose of using the eight years as laid down in this part of the regulation is to ensure that compensation shall be paid to those people who can claim really to have their roots in the industry.

With regard to Regulation 8 (4) I agree with the hon. Member for The High Peak in the point he makes that it is covered in sub-paragraph (f). It is very difficult to define war service nowadays, and therefore we cover it as best we can from (a) to (e) and put in the final sub-paragraph (f) which gives us elasticity in the matter. We will ensure that no injustice is done in that regard.

The next point which the hon. Member made, I can assure him, is a very complicated one. I myself looked at this part of the regulation a number of times and I felt it would be much better if it could be simplified, but I am afraid that what we want to say here cannot be made, in the English language, any simpler. The hon. Gentleman wishes to say "provided a net annual sum shall not exceed two-thirds of the total amount." The difficulty here is this: if we use the words "total amount" or the word "amount," it means, in effect, we have to use the actual amount which the person earned during the last year. Therefore, we use the word "rate" here because—to use an extreme example—a general secretary of an approved society may die and the assistant secretary become general secretary. His rate of salary goes from £500 to £850, and by using the word "rate" he gets the advantage of the salary he was receiving at the date before 5th July.

Mr. Molson

On page 3 one gets the definition of "net emoluments": in relation to an existing employee who suffers an attributable loss of employment"— I leave out a few words— means the normal annual rate of his salary or wages immediately before such loss or diminution together with the amount of any other emoluments during the preceding twelve months … Broadly speaking, in the case of the vast majority of canvassers or representatives working for approved societies, do we take it that "rate" means the fixed weekly wage or salary and that the "amount" includes such sums as commission and so on paid to them?

Mr. Steele

We are dealing with approved society staff rather than the ordinary industrial agent. The "net emoluments" means the "normal annual rate." That is perfectly true. I think the word "normal" is the effective one, because in the case of a person I mentioned his rate has gone up from £500 to £850, but the £850 would have to be the normal rate because in effect that was the salary which he was then receiving.

The question how the Minister can be satisfied that a person would have gone on working is fairly simple. We have all the facts on record of approved societies and these are non-pensionable people. The fact is that it was the practice for them to go on working because there was nothing for them after they retired. What we have tried to do is to ensure that when these people do retire they will get compensation because of this particular loss. I think quite clearly that with the information we have and with the knowledge in our possession regarding approved societies we shall deal with it easily. Then there is the question of widows' superannuation. That is not dealt with in these regulations but is dealt with in the superannuation regulations. Provision has been made here for the person who had any of these rights; they have now been frozen but they exist for him should the necessity arise. Turning to the question of the tribunal, if the hon. Member for The High Peak will look at page 4 he will see that: 'tribunal' means a referee or board of referees appointed by the Minister of Labour and National Service. It will be under that authority. I think that covers most of the points which have been raised, and I hope that we shall now have the regulations.

Resolved: That the Draft National Insurance (Compensation) Regulations, 1948, a copy of which was presented on 29th November, be approved.