REDUNDANCY PAYMENTS BILL

HC Deb 26 April 1965 vol 711 cc33-160

Order for Second Reading read.

3.35 p.m.

The Minister of Labour (Mr. Ray Gunter)

: I beg to move, That the Bill be now read a Second time.

The main objects of the Bill are to require employers to make compensation payments to workers who become redundant, and to establish a central Redundancy Fund, financed by contributions from employers, from which employers making redundancy payments can recover part of the cost. In the White Paper on the Economic Situation, published last October, the Government undertook to carry out an active policy to make it easier for workers to change their jobs in accordance with the needs of technological progress, and promised that a system of severance payments would form part of that policy. The Bill now before the House is in fulfilment of that undertaking.

If I may just clear up a point of terminology, hon. Members will have noticed that the payments required by the Bill are described as "redundancy payments" and not "severance payments". It was agreed during our consultations with industry that the term "redundancy payments" describes more accurately the purpose of the payments and the circumstances in which they will be made.

The White Paper said that this Measure would be part of a broader policy, and I should like to enlarge on that for a moment. We see this Bill as an important step in the Government's general programme to push forward the modernisation of British industry as fast as possible, and to enlist the co-operation of workers as well as management in this process.

The scheme embodied in the Bill has to be looked at alongside the other measures that the Government have taken and are planning to take. It fits in with the machinery that we are establishing to ensure the planned use of our resources, especially our resources of manpower, which will be fully stretched in the coming years. It is an important complement to our efforts to develop the science-based industries and to deploy our manpower and other resources where they can make the most effective contribution to the economy.

We are pushing forward with the expansion of facilities for retraining workers who have to change their jobs. We have introduced improved grants and allowances for those who move to employment in another area. We have improved the level of unemployment benefit, and we are planning further changes in National Insurance benefits which will have an important bearing on labour mobility. I shall want to say something further on that shortly.

All these measures, I suggest, add up to a coherent policy for pushing forward the radical changes that we need if we are to achieve greater prosperity, while still safeguarding the interests of the workers affected. A national scheme of compensation for redundancy has a vital part to play in all this.

The basic idea behind the Bill, apart perhaps from the proposed Redundancy Fund, is not new. The previous Government had for some time been discussing with industry the possibility of legislation on this matter, and some of my hon. Friends have in the past made considerable efforts from the benches opposite to promote legislation. I therefore hope that the principle of requiring a minimum standard of compensation for redundant workers will command the general support of the House.

I think that I can fairly say, also, that there is wide support for this on both sides of industry. The Bill in its present form is the product of consultations with industrial organisations, and it has benefited from useful contributions by both sides. Obviously, not every feature in it appeals equally to the employers and the unions—the millennium has not arrived yet. But I can tell the House that the main structure of the scheme is broadly acceptable to both the British Employers' Confederation and the T.U.C. I should like to pay tribute to the constructive and progressive attitude of the representatives of industry with whom we have consulted, and of the British Employers' Confederation in particular. After all, it is the employers who will be finding the money.

I have said that the basic idea behind the Bill is not new, but, nevertheless, I am quite sure that the introduction of a universal scheme of this kind is a landmark of the first importance in the evolution of our industrial society. It marks a very significant step forward in the way we think about the status of the industrial worker.

I should hesitate before reading the House a history lesson, but it is worth recalling that in the early days of the Industrial Revolution the displacement of workers by new industrial processes was regarded as a natural consequence of the operation of economic laws which nobody could help, and one of the hazards of life which was part of the inevitable lot of the worker. The fate of people like the handloom weavers was one of the grimmest features of the industrial life of those times. It took a long time for society to accept the need for some means of preventing sheer destitution where workers lost their employment.

We have now moved on to another stage, and the Bill gives reality to the idea that, as The Times said in a recent leader commenting on the Bill, a man has some rights in his job just as an employer holds rights in his property, and his rights gain in value with the years. I would say to the House that if a man is deprived of those rights by economic circumstances outside his control, he ought to be compensated. Industry has long recognised the justice of this for higher management and I believe the House would agree that it is high time to extend it to all workers.

We are going a good deal further along the path on which the previous Government's legislation on rights to notice was the first step. I hope that before long we shall be able to take a further important step by working out within industry a better measure of protection for the employee against arbitrary dismissal. Referring to all these developments, The Times leader which I have already quoted concluded: It could be that these things are the beginning of a new conception of partnership in industry". This is certainly the Government's view, and I fervently hope that it may prove to be so.

I have been dealing so far with what might be called the social justification for the Bill. Now I should like to say something about the economic case for it. One of our most urgent needs is to use our manpower more efficiently. We have far too many restrictive practices, too much over-manning and under-employment of labour. We all know that we cannot afford these things. Not only do they help to keep us poorer than we need be, but they also make for sour and cynical relations between employers and workers. It is no good attributing them entirely to cussedness on the part of unions and workers. They are the legacy of years of economic insecurity and fears for the future of job or craft. We have got to remove that insecurity in order to tackle the problem.

I would not pretend for one moment that the Bill will achieve this in itself. It takes more than the prospect of a golden handshake to reconcile workers to the upheaval of technological change. The scheme must be part of a broader policy, as I have said. But it has an important and necessary part to play in allaying fears of redundancy and resistance to new methods and economic change, and so I should like to turn to the relationship with unemployment benefit.

It has been suggested in some quarters that the Government have got their priorities wrong, and that we ought to have introduced wage-related unemployment benefit before legislation on redundancy pay. Let me make it clear straight away that the Government are committed to both these things, and the present Bill is in no sense a substitute for changes in unemployment benefit. The two things serve different purposes. The purpose of redundancy pay is to compensate a worker for loss of job, irrespective of whether that leads to any unemployment. It is to compensate him for the loss of security, possible loss of earnings and fringe benefits, and the uncertainty and anxiety of change of job. These things may all be present even if the man gets a fresh job immediately. Unemployment benefit, on the other hand, is designed to provide a regular source of income during unemployment.

In the Government's view, both these measures are needed. There have been some suggestions that if the object is to increase the mobility of labour, redundancy pay is largely irrelevant and wage-related unemployment benefit is the real answer. I disagree with this. Certainly, we need to reduce the drop in income which most workers now suffer when they become unemployed, and this can best be done by establishing a closer relation between the level of earnings and the level of unemployment benefit. Unless we take action on these lines, people will tend to resist any change that might mean a spell of unemployment.

At the same time, we have to face the fact that a high level of unemployment benefit is not in itself an incentive to the worker to get back into employment as quickly as possible. There will always be some people on whom it will have the opposite effect, though I believe that they are only a minority. But lump-sum once-for-all-payments, such as are required by the Bill, cannot be criticised on this ground and could never have the effect of giving the prudent worker a financial incentive to spin out a spell of unemployment.

It is also, I think, fair to say that if our object is to encourage mobility of labour by reducing resistance to change, then redundancy pay based on length of service bears more directly on the problem in some ways than improvements in unemployment benefit. It offers substantial compensation to those workers who have most to lose through change of job and who will, therefore, naturally be most opposed to change.

Unemployment benefit, on the other hand, is a uniform payment spread over a much wider range of workers—those with short service as well as long service, and those losing their jobs for a wide variety of reasons besides the economic and technological change with which we are specially concerned in the context of labour mobility.

I do not want to suggest that wage related unemployment benefit has no bearing on mobility of labour. It has, but it is quite wrong to suggest that, in meeting our economic problems, wage related benefit comes first and redundancy pay comes nowhere. In the Government's view, both are necessary, and the scheme which we are considering today is just as desirable on economic grounds as it is on social grounds.

It would not be proper for me to speculate about the timing of Government action on unemployment benefit. I will only make two points. First, one cannot consider unemployment benefit in isolation from the rest of the National Insurance scheme. Secondly, there are many formidable technical problems in introducing any system of wage-related national insurance benefits, and these will take time to resolve. The Government are pressing on with a full-scale review of National Insurance benefits generally, and are examining with special urgency the problem of wage-related short-term benefits.

Turning now to the Bill itself, I should like to run over the main provisions. I hope that the House will forgive me if my speech is longer than I would desire, but this is a long and complicated Bill. The first part of the Bill is mainly concerned with defining the circumstances in which redundancy payments are to be made. The definition of redundancy is contained in Clause 1. What it amounts to is that the employer is required to make a redundancy payment where a worker is dismissed because the work on which he was employed has disappeared. It makes no difference what the reason for this is—whether it is due to a change in the methods of production, or a fall in demand for the product; whether to the complete closure of the establishment or its transfer to another location. By a later provision in the Bill—Clause 17—loss of employment due to the death of the employer is also covered.

We have also thought it right to provide for redundancy pay in certain circumstances where the worker has been laid off or kept on short-time for a substantial period. This is dealt with in Clauses 5 to 7. Clearly, some provision of this kind is necessary. It would not do for an employer to be able to evade his obligations by laying off a worker indefinitely without actually dismissing him, in the hope that the worker would leave voluntarily and that, therefore, no question of a redundancy payment would arise.

It is, therefore, proposed that where a worker has been laid-off—or kept on short-time of less than half a normal working week—for four successive weeks, or for an aggregate of six weeks in any 13-week period, he should then be able to claim redundancy pay. He will be entitled to a payment unless the employer can satisfy a tribunal on two points: first, that there was good reason for the lay-off or short-time to have continued for so long; and, secondly, that there is a reasonable expectation that full-time working will be resumed within a further four weeks and that lay-off or short-time will not recur for a substantial period.

Therefore, after a worker has been laid-off or kept on short-time for four weeks—or an aggregate of six weeks in any 13—he will be able to claim a redundancy payment from his employer. He must put in his claim before he terminates his contract. Having done so, he is free to seek other employment, without prejudicing his claim to redundancy pay. If the employer contests the claim—for instance, because he anticipates an early resumption of full-time working—then the case will go to a tribunal for settlement. If, after he has put in his claim, the worker does not leave for fresh work but remains on the books of his employer, the tribunal may still award him a redundancy payment, but this will only become payable when and if the worker terminates his contract and leaves the employer's service.

These provisions are necessarily somewhat complex—I have not gone into all the details—because they are dealing with a complex situation. But the basic ideas behind them are, I suggest, both reasonable and necessary. They are that an employer should not be liable to make a payment because of a purely temporary lay-off lasting for only a short time. On the other hand, it should not be open to an employer to keep a worker laid-off or working less than half normal hours for an indefinite period. The provisions in the Bill attempt to hold a reasonable balance between these considerations.

I should draw attention of hon. Members to the important provision in Clause 2 of the Bill, which excludes the worker from entitlement to a redundancy payment if his employer offers him suitable alternative work, and if the worker unreasonably refuses that offer. Any question as to whether the work offered was or was not "suitable"—or even if the job itself was suitable, whether the worker was still in all the circumstances acting reasonably in refusing it—would be for the tribunals to settle. I shall have a word to say on the tribunals later.

I shall now turn to scale of payments. This is laid down—

Sir Spencer Summers (Aylesbury)

Before the Minister leaves that point, could he elaborate somewhat, in view of the obscurity of certain passages to which he has referred, on the suitability of a job offered in terms of pay?

Mr. Gunter

That would be a matter for the tribunals, which I shall come to later. It will be for them to decide.

The scale of payments is laid down in Schedule 1 to the Bill. The worker will not become eligible for a redundancy payment until he has served two years with his employer. Payment will be based on a maximum of 20 reckonable years of service. Years of service below age 18 will not be reckonable. For years of service between ages 18 and 21, the scale of payment will be half a week's pay for each year. For years between ages 21 and 40, the rate will be one week's pay per year; and for years over age 40, one and a half weeks' pay per year.

I should make it clear that when a worker's reckonable service includes years at these different ages, his total payment will be made up of payments at these different rates. Thus, a man becoming redundant at age 46 with 10 years' service will get one and a half weeks' pay for each of the five complete years of his service over age 40, plus one week's pay for each of the remaining five years at age 40 and below—making a total of 12½ weeks' pay.

The maximum payment to which any worker will be entitled will be where he has 20 years' service all over age 40, when he would get 30 weeks' pay.

Mr. Ronald Bell (Buckinghamshire, South)

Is the age not 41 rather than 40? I think that the phrase "under 42" is in the Bill.

Mr. Gunter

The Bill says "not below 41". A week's pay means gross earnings —not basic rates—at the time of dismissal, for a week of normal hours excluding overtime. But earnings above £40 a week will be disregarded in calculating the amount of redundancy pay. This means that the maximum entitlement under the scheme in cash terms will be £1,200.

This scale of payment is generous by existing standards. Over three-quarters of the working population are not at present covered at all by schemes for redundancy pay, though it is true that many employers in fact make such payments when the need arises, even though they have no formal scheme. The average level of payment among those firms and industries which at present have schemes is about half a week's pay for each year of service, though the standard has been rising recently.

I am sure it is right that the scale of payments under the Bill should be generous, if the scheme is to do justice to redundant workers and if it is to make the necessary impact on the attitude of workers towards economic and technological change. At the same time, of course, the Bill only lays down minimum requirements and it will be open to employers to improve on these.

Hon. Members will notice that the scheme is designed to provide higher payment to older workers. Experience of large redundancies in recent years has shown that it is the older man who has most difficulty in finding fresh employment. He has most to lose from redundancy, and it is right that the scale of compensation should reflect this.

The scheme does not, however, require payment to workers over age 65, or 60 in the case of women. The object of redundancy pay is to compensate a worker who loses his job when he could reasonably have expected it to continue. People over age 65 are in a different position. They have passed the minimum age for State pension, and while many of them, in fact, continue at work —and we would want to give them every encouragement to do so—it cannot be said that they have the same expectation of continued employment as younger workers, or that there is the same case for compensation if they should become redundant.

I now come to Part II of the Bill, which deals with the Redundancy Fund. It provides for the establishment of a central fund, to be financed by a surcharge on the employer's weekly National Insurance stamp of 4d. in respect of men and 2d. in respect of women. The purpose of the Fund is to enable employers who make payments to redundant workers as required by the Bill to recover a part of the cost from the Fund in the form of rebates. They will be able to recover half of the cost of all payments which relate to years of service at age 40 or below, and two-thirds of the cost of payments relating to years of service over age 40.

If we consider the scheme as requiring a basic scale of compensation of a week's pay per year of service, with an additional premium for years of service at the higher ages, then the Fund will bear half the cost of the basic scale, plus the whole of the additional premium for years of service over age 40. The effect is that the additional cost of making an older worker redundant, as compared with a younger worker with the same length of service, will fall entirely on the Fund and not on the individual employer. I think that the House will appreciate that this is important. It will prevent the higher scale for older workers from acting as a deterrent to employers in engaging such older workers.

We estimate that, on the basis I have outlined, the effect will be that, looking at the cost of the scheme as a whole, some 60 per cent. of it will be borne by the Fund, with 40 per cent, falling on the individual employer.

In addition to reimbursing to employers part of the cost of the redundancy payments they make, the Redundancy Fund will guarantee to workers the whole of the payments due to them under the legislation. Where the worker is unable to recover from his employer what is due to him—for instance, because the employer becomes insolvent —the Fund will pay the worker the whole amount on the employer's behalf, and will then seek to recover from the employer that part of the cost which would ordinarily have been met by him.

The basic idea of the Fund is to spread part of the cost of redundancy over the industry as a whole. I think that this is right, and the proposal is strongly supported by the British Employers' Confederation. Redundancy is bound to hit some industries harder than others, and the cost of compensation payments will be heaviest on those firms and industries which are least able to bear it. Without some means of spreading the cost, those industries which are contracting would have to face a crippling burden of cost if compensation is to be on an adequate scale.

A central fund is the only means of reconciling a decent standard of compensation with the employer's capacity to pay. And it is not only the contracting industries which will benefit from the spreading of the cost. We do not want firms which are contemplating the introduction of new equipment involving some reduction in their labour requirements to be deterred from going ahead by the cost of the compensation which they would have to pay to displaced workers.

I think that it is not unreasonable that expanding industries should make some financial contribution towards the cost of releasing labour from those sectors of the economy where there is a surplus. The expanding industries, after all, will benefit, because it is they who need to recruit the workers released elsewhere.

It has been suggested that a central fund should bear a higher proportion of the overall cost than we propose. Indeed, it has been suggested to me that it should bear the whole of the cost. I think that this would be most unwise. If employers could freely declare redundancies at somebody else's expense, this would encourage haphazard use of manpower and would be wide open to abuse. It is essential that a substantial proportion of the cost should still be met by the employer declaring the redundancies. This will safeguard the Fund from possible abuse, and will constitute a valuable incentive to employers to give more thought to the forward planning of their manpower requirements.

It cannot be said too often that manpower is our most precious resource. Yet far less attention is given by management today to the budgeting of manpower needs than to the forward planning of other aspects such as investment and marketing. From this point of view, I believe the redundancy payments scheme will have a salutary effect. It will make employers more careful in planning their forward recruitment of labour, and create the conditions in which those employers who are now carrying surplus labour can face up to the job of getting their labour requirements on to a more realistic basis.

Granted the need for a central fund, there is, I think, no doubt that the most practical means of financing it is through a surcharge on the National Insurance stamp. I should like to stress, however, that the stamp is to be used simply as the machinery for collecting the money. The Redundancy Fund itself will be quite separate from the National Insurance Fund and will be used solely to finance redundancy payments, not for any other purpose.

In deciding on the right level of surcharge required to finance the Fund, we have, very naturally, been anxious not to impose a bigger charge on industry than was justified by the need. The surcharge of 4d. per man and 2d. per woman will yield about £15 million in a full year. As I have said, the Fund will be bearing about 60 per cent. of the overall cost, and, therefore, the level of surcharge proposed should be adequate to finance the Fund's share of total redundancy payments up to £25 million per annum.

The total cost of redundancy payments will depend on the number of redundancies, the age and service composition of workers made redundant, and future changes in earnings since the payments will be based on earnings. None of these factors can be forecast with any precision. We have had to take into account a range of possibilities, using the best information available to my Department. In the light of this, we have proposed a level of surcharge which should, we think, ensure that the Redundancy Fund is self-financing over a substantial period.

Only experience will show whether any adjustment is needed. If it is, the Bill gives me power, subject to the approval of Parliament by affirmative Resolution, to vary the surcharge either up or down.

What I regard as an important byproduct of the introduction of a Redundancy Fund is that it will be necessary to ask employers to give notice of a claim on the Fund some time before the redundancies in question actually take place. We shall need this, first, so that my Department—which will be administering the Fund—can satisfy itself as to the bona fides of the claim and, secondly, so that if there is any doubt about the amount of rebate due to the employer, this can be cleared up with him before he makes the payment to the worker.

Mr. J. B. Godber (Grantham)

Are these administrative arrangements, covering the giving of notice in advance, and so on, incorporated in the Bill, and, if so, where?

Mr. Gunter

I think that they will be found in the administrative parts of the Bill.

Clause 26 gives me power to make regulations requiring prior notice of claims, and I would propose to require two weeks' notice—or, where the redundancy affects 10 or more workers at once, four weeks' notice. It should be possible, in the great majority of cases, for employers to give that much notice, though there will be some occasions where it is impracticable.

The Bill provides for an employer's rebate from the Fund to be reduced by up to 10 per cent. where he fails to give the required notice without reasonable excuse. But the employer may appeal to the tribunal if he thinks that a reduction has been made unreasonably.

This will mean, in effect, that the employment exchanges will get advance notice of virtually all redundancies. I intend to see that the utmost use is made of this to get ahead in good time with the placing of redundant workers in fresh employment or with arrangements for retraining where that is needed.

I come to the tribunals which, we propose, should deal with disputes under the legislation, whether about entitlement to redundancy pay or about rebates from the Fund. This is a matter on which I am now in process of consulting the Council on Tribunals.

The Bill proposes that the tribunals to be used for this purpose should be those which are shortly to be set up under the Industrial Training Act to hear appeals from employers against the training levies imposed by the Industrial Training boards. I think that these tribunals will be equally suitable for dealing with disputes under the Bill. They will consist of a legally qualified chairman, with one representative each of employers and workers. The chairman and members will be selected from panels of names compiled on a national basis; but the tribunals will sit in particular localities in all parts of the country as required.

These Industrial Tribunals—as it is proposed they should be called—will be important bodies. They will be organised so as to be easy of access to workers and employers, and to provide a speedy means of settling disputes with less formality and expense than might be entailed if disputes were to go to the courts.

Besides their work under the Training Act and on redundancy payments, the Bill provides for the tribunals to take over jurisdiction on disputes about compensation for loss of employment due to statutory action such as nationalisation or reorganisation of local government boundaries. Such disputes are at present dealt with by boards of referees, appointed ad hoc, as cases occur.

I think that there are advantages in bringing these various functions together to be dealt with by one set of tribunals. This should make it easier to get good calibre people to serve on them, and should help the tribunals to build up a good standing in the eyes of industry and to command the confidence of employers and workers.

I would not rule out the possibility that as the tribunals become established and gain experience, further functions relating to industrial relations might be given to them. I believe that they will constitute a valuable experiment in our industrial relations system, and I hope that we can keep an open mind on the development of their rôle in the future.

Clause 11 of the Bill gives me power to make exemption orders and I will briefly explain the reason for taking this power. The Bill, as I have explained, provides that an employee must have a minimum of two years' continuous service with one employer before he can be entitled to a redundancy payment. Workers who change their jobs frequently may, therefore, never acquire the right to a payment. Some workers may prefer casual work, and that is for them to choose. There are, however, some industries—such as construction or shipbuilding and ship-repairing—where the nature of the work makes it difficult for the employer to give continuous employment to all his employees for long periods.

The Bill will apply to these industries as to industry generally, and there are many workers in them—more than is often supposed—who work continuously for one employer for long periods. They will be qualified for redundancy payments in the ordinary way if they become redundant. But where workers in these industries are compelled, because of the nature of the work, to change their employer frequently, they may find that they will never qualify for redundancy payments, even though they lose their employment because of redundancy as defined in the Bill.

It is fair to point out that where such workers have spells of unemployment between jobs they will gain from the higher rates of unemployment benefit which we have now introduced. Similarly, they will benefit particularly from wage-related unemployment benefit when that is introduced.

Nevertheless, we must recognise that the employers of all these workers will be paying their contributions to the Redundancy Fund. But their employees, or many of them, will not be entitled to redundancy pay if they have been continuously employed with one employer for less than two years and then become redundant. We have given great thought to the problem that emerges from these industries.

The main problem here is, of course, not one of redundancy, although that can be present. It is really the problem of casual employment; and the proper remedy is to reduce this. I hope that the incentive of an entitlement to a redundancy payment based on continuous service with one employer, which is offered by the Bill, will encourage both workers and employers in these industries to co-operate in working out arrangements whenever possible to provide more permanent employment.

I know that there are very great difficulties. Certainly, I recognise that if these industries are to provide more stable employment, there will be many cases where this could not be done on the basis of service with a single employer. It might, however, be more practicable on the basis of service with a group of employers or within a section of the industry. A possible answer to these difficulties, for which the Bill makes provision, is that employers or employer's organisations and the trade union or unions representing employees may agree on a redundancy scheme which, in their judgment, is more suitable for their circumstances, and apply to me for exemption under Clause 11.

In these circumstances, I can make an order which causes Clause 1 not to apply to the employees covered by that agreement. Instead, the agreement will apply and the employees will be entitled to the redundancy payments which are due under the rules of that agreement. These rules might provide, for example, that service anywhere within the group of employers who are parties to the agreement will count as reckonable service, even if it has included occasional spells of unemployment.

In this way workers who have frequently changed their employer, but who have, nevertheless, had long periods of employment within a particular section of industry, will be able to acquire an entitlement to redundancy pay appropriate to that period. The payment would become due where they became redundant from the whole group of employers concerned, as distinct from being redundant at a particular firm.

I shall have power to make rebates from the Redundancy Fund to employers who make redundancy payments under exempted agreements of this kind. These rebates will be on the same basis as rebates made to employers who make redundancy payments for which they are liable under the terms of the Bill, except that the rules for reckoning continuous service will be those of the agreement and not those of the Bill.

Mr. A. E. Cooper (Ilford, South)

Can the Minister say what thought has been given to problems arising in the catering industry, with particular reference to seaside resorts, and so forth?

Mr. Gunter

We have had discusssions about practically all of the industries affected by this Measure, and we shall continue on these lines to give thought to any other industry where special problems may be involved. I do not want to enter into detail now about the way in which these payments will be calculated. What I want to make clear is that the purpose of this exemption power is to meet the special conditions of particular firms and industries—especially industries of the kind I have mentioned—and to give them a fair run. I have discussed this matter in my consultations with the T.U.C. and the British Employers' Confederation who, of course, include representatives of the particular industries I have been talking about. I think that I can say that they are broadly in agreement that this is a useful provision.

It will now be for the representatives of employers and workers in such industries to consider whether they can take advantage of it. I propose to have talks with the construction, shipbuilding and ship-repairing industries to explain the position to them. I will, of course, give any help I can in helping them to devise schemes which will enable them to benefit from this legislation.

I should now like to mention some points affecting the coverage of the scheme. It will cover the vast majority of the working population, including domestic workers. But there are a few excluded categories provided for in Clauses 14 and 15.

Clause 14 excludes workers, other than apprentices and merchant seamen, who are employed on contracts for a fixed term of two years or more, where the contract was entered into before passage of the Bill. Where workers are engaged on such contracts entered into after that date, it will be open to the parties to the contract to agree, if they so choose, that the worker will forgo any rights to a redundancy payment when his contract expires.

think that this is reasonable. An employee taken on for a fixed term of, say, three years, should not necessarily be compensated if he is not re-engaged at the end of the three years. In many cases he will not expect to be re-engaged at the end of that time. If, however, he is dismissed before the expiry of the fixed term, then there is nothing in Clause 14 which affects his entitlement to a redundancy payment.

Clause 15 excludes registered dock workers. Their employment is effectively safeguarded by the conditions of the National Dock Labour Scheme, and redundancy in the ordinary sense does not arise.

Share fishermen are also excluded, since they are co-partners in a joint enterprise and not employees in the ordinary sense, and the concept of redundancy cannot really be applied to them.

Besides these categories which are specifically excluded, the general rules of the scheme exclude certain others. Employees normally working less than 21 hours a week are excluded—and I have already mentioned that workers over 65, or 60, for women, are excluded.

Where a weekly National Insurance contribution has to be paid in respect of workers who are excluded from the scheme, this will necessarily include the redundancy surcharge. It has to be the same National Insurance stamp for everybody, and the redundancy surcharge will thus be a general charge on employment, whether or not the workers in respect of whom it is paid are eligible for redundancy payments under the Bill, and whether or not they are ever in practice likely to become redundant.

It will not, in general, be practicable to contemplate refunding to employers the surcharge they have paid in respect of workers excluded from the scheme. The Bill, however, does contain a power to do this—in Clause 27—in the case of certain excluded categories or categories which may be excluded in the future. But the only category at present excluded where I would propose to exercise this power is that of registered dock workers Dock employers are already obliged by Statute to pay a substantial levy under the Dock Labour Scheme to provide for payments to workers during spells of unemployment.

Mr. Ivor Richard (Barons Court)

As I understand him, my right hon. Friend says, in respect of Clause 14, that the employer's liability to make redundancy payment would continue even where the employee is exempt from this provision. Does any such provision apply to an employer or an industry in respect of which an exemption order has been made under Clause 11? In other words, do exempt organisations still have to pay the 4d.?

Mr. Gunter

That is what I said.

I was talking about the Dock Labour Scheme. I think that this is a special case where a refund of the redundancy surcharge is justified, and where, because of the central machinery of the National Dock Labour Board, it will be practicable to make the necessary arrangements.

I want to turn now to the special position of Government employees. They do not, in law, have a contract of employment in the ordinary sense, and it would be extremely difficult to apply the complex provisions of Part I of the Bill to the Crown as employer. This part of the Bill accordingly does not bind the Crown. In the great majority of cases, where Government employees become redundant they already receive under existing arrangements compensation payments as good as or better than those required by the Bill.

I am, however, authorised by my colleagues to give an assurance that the Government will review existing arrangements through the appropriate joint consultative machinery, with a view to ensuring that Crown servants who become redundant in circumstances comparable to those covered by the Bill will be treated not less favourably than if they were included in the Bill.

Mr. Godber

Does that provision include Ministers as well?

Mr. Gunter

I will have to think about that.

Paragraphs (a) and (b) of subsection 4 of Clause 15 have the effect of excluding from the Bill employees of certain public bodies who are technically not Crown servants but whose conditions of employment are analogous to those of Crown servants. These include employees of such organisations as the Forestry Commission and Nature Conservancy. Subsection 4(c) excludes employeees in the National Health Service. The assurance I have just given to the House extends to all these employees.

Mr. Patrick Jenkin (Wanstead and Woodford)

Will the Minister say whether the Bill applies to Members of Parliament?

Mr. Gunter

The hon. Member is a bit late. I have had that point already.

Mr. Godber

I referred to Ministers.

Mr. Gunter

We will have a talk about that a few weeks before the election.

Although the Crown will not be required by the Bill to make redundancy payments, it will be required to pay the surcharge in respect of Crown servants, other than the Armed Forces. It is, therefore, equitable that the Government Departments and other public bodies concerned should receive rebates from the Redundancy Fund where they make redundancy payments analogous to those required by the Bill. Clause 34 gives me the necessary power to make rebates in such cases on the same basis as would have been payable had the redundancy payments been made in pursuance of Part I of the Bill.

Now I come to strikes. Before I leave the substantive provisions of the Bill, I should like to comment on the way it is proposed to treat strikes in relation to entitlement to redundancy pay. Hon. Members on both sides of the House know that this is a difficult question. I know that some hon. Members will feel that legislation which confers benefits on employees, as the Bill does, should be used to discourage irresponsible strike action. This was attempted in the Contracts of Employment Act, where, at present, a strike in breach of contract breaks continuity of employment for purposes of the Act and thus leads to forfeiture of accumulated rights to notice.

Others will feel that, whatever one's views about some types of strike action, it will serve no good purpose in the long run to attempt to discourage it by these means, and that it would be particularly inappropriate to reduce rights to redundancy pay because of strike action, bearing in mind that these rights may have been built up through loyal service over 20 years and more.

In drafting the relevant provisions of the Bill, I have had two points particularly in mind. First, it has become clear, partly as a result of judicial pronouncements during the case of Rookes v. Barnard, that the distinction between strikes in breach of contract and other strikes is not what it was thought to be at the time the Contracts of Employment Act was passed. It is not at all the same as the distinction between official and unofficial strikes. It now seems likely that the great majority of strikes, including official strikes, are in breach of contract.

The second consideration which has influenced my approach to this problem is the setting up of the Royal Commission on Trade Unions and Employers' Organisations. Obviously, the problem of unofficial strikes will be a major issue before the Royal Commission. The House is now considering the Trade Disputes Bill, which is designed solely to restore the legal position to what we thought it was before the case of Rookes v. Barnard. Apart from that Bill, I would hesitate to lay before the House any proposals for fresh legislation which attempted to deal with any aspect of the problem of strikes, in advance of the Royal Commission's report.

In the light of these considerations—I assure hon. Members that very careful thought was given to this and that we spent a long time in discussing it—it seemed to me right that the Bill should, in effect, neutralise strikes and lock-outs so far as their effect on entitlement to redundancy pay is concerned, and that the Contracts of Employment Act should be brought into line in this respect. What I mean by that is that under no circumstances should a strike—or, for that matter, a lock-out—reduce or eliminate a worker's right to a redundancy payment or to a period of notice; nor, on the other hand, should it ever give rise to such a right.

Accordingly, Clause 33 has the effect that a worker's continuity of service for purposes of both the Bill and the Contracts of Employment Act cannot be broken by a strike, whether in breach of contract or not, though the actual time on strike will not count as reckon-able service. On the other hand, under Clause 7, a worker is not entitled to a redundancy payment because of short-time or lay-off where this is caused by a strike—whether in another part of the same firm or elsewhere, and irrespective of how long the lay-off or short-time continues.

Finally, I should like to say a word on timing. It will take some time after the passage of the Bill before this scheme can be brought into force. A new National Insurance stamp will have to be introduced, and machinery for administering the Fund established. A considerable number of regulations will have to be made. We shall press on with this as fast as possible, and my object will be to bring the scheme into operation before the end of this year.

The Bill is a long and complex Measure, as, I think, any legislation in this field is bound to be. I have had time only to mention the main provisions. I hope that I have said enough to gain a wide measure of support for the scheme, which has already been given a favourable reception by the two sides of industry and in recent Press comment. I believe that it is a Measure which is socially just, which goes to the heart of our economic problems in the coming years, and which will have a useful part to play in putting industrial relations in the country on to a sounder footing. I therefore commend it to the House.

4.35 p.m.

Mr. J. B. Godber (Grantham)

The opening part of the right hon. Gentleman's speech in moving the Second Reading was both defensive and disappointing to a degree. When he came to the provisions of the Bill itself he gave a lucid explanation which was helpful and for which we are very grateful, but that part of his speech made it abundantly clear that the Bill will require the closest scrunity in Committee, as I am sure he will agree. We shall look forward to helping him to amend and improve the Bill during that period. We hope that we shall find him more co-operative in this than he was on some previous occasions, which I shall not go into in detail.

The Bill, as the Minister said, is based, in some degree at any rate, on a draft we had prepared and discussed with both sides of industry some time ago, but it has been radically altered and some wholly extraneous, and, in my view, wholly unsuitable, matters have been incorporated in it. The main principle of compensating long-service workers who lose their jobs through redundancy is one which has long been accepted by many employers. The number of redundancy agreements in particular industries and particular firms has been increasing steadily over the last few years. I think that it has been accelerating over the last year or two.

In February, 1964, when we last discussed this matter in the House, I said that I estimated that 20 per cent. of all industrial employees were then covered. The Minister put it another way this afternoon when he said that rather over 75 per cent. were not covered. I think that the number of those covered has risen from 20 per cent. to about 25 per cent. This is something which is gathering some strength by voluntary action, but I do not for a moment suggest that the present speed at which that is going on is sufficient. This is a principle which is certainly generally to be welcomed and one which we have endorsed on many occasions.

My main criticism of the Bill, and of the Minister's speech, is not against the principle of the Bill and not against its detail, although I have to make some criticism of that. My criticism is on the Government's order of priorities. We are discussing today the wrong Bill brought forward for the wrong reasons. The Government have paid a great deal of lip service to the need to modernise our industry. The Prime Minister, before the last General Election, argued at great length the need for what he called "a science-based industry". I think that the Minister used the same phrase this afternoon in the early part of his speech. He talked about science-based industry and how the Bill could help to promote it. He talked about taking full advantage of the new techniques calling for a high degree of mobility of labour. This was the basis of a great deal of what we heard before the General Election—and, to a lesser degree, since—from the party now in power.

But if it is mobility of labour which is required, why is it that it is this Bill which is brought forward at this particular time? The Minister was very conscious of this point, because in the early stages of his speech he was very defensive when he referred repeatedly to the related question of wage-related benefit, and he did his best to argue that that would not be a preferable matter to bring forward at present. He is wrong in this. He has definitely got his priorities wrong, and I shall seek to show why.

We in office had a logical and comprehensive plan designed to improve the status of the worker and encourage him to accept greater mobility, in his own interest and in that of the country as a whole.

Mr. William Hamling (Woolwich, West)

Unemployment.

Mr. Godber

I do not know why the hon. Gentleman should say that. If he studies the record, he will find that there is certainly no justification whatever for that in regard to the developments of which I am talking, from the Contracts of Employment Act onwards, all of which were designed to help the worker. The present Government inherited much of our work on this. It was my predecessor who started this project with the Contracts of Employment Act. We followed it on with the Industrial Training Act, designed to help workers.

At Question Time this afternoon I reminded the Minister of the progress we had made on this. His reply was rather curious. It is not easy to follow up a Minister at Question Time when he makes a strange comment. The fact that we were to debate this subject later this afternoon had perhaps escaped the Minister's mind. However, he gave that answer. He talked about the conception and the delivery. Perhaps he has greater experience of those matters than I have. So far as I know, in relation to this matter we had not only had the conception; we had also had the delivery, in the shape of the four training boards and the fifth, the chairman of which I had named. It was no good the Minister trying to get out of it by that earlier reply.

Mr. Gunter

I knew that the right hon. Gentleman would attach priority to the wage-related employment benefits. I remember discussing this matter with his predecessor. We had long and earnest chats. That was a long time ago. The question I ask is: why did not the Tories do anything about that, which was, perhaps, as important as contracts of employment?

Mr. Godber

The Minister cannot get away with it, because I had at that moment of time left that argument and was dealing with industrial training boards. He is trying to divert attention from that. I am returning to his specific point. I shall tell him precisely why we developed in the way we did.

As to the industrial training boards, I make it clear, and repeat to the House, for the benefit of the Minister, that we look forward to seeing some great progress from him there. Although we do not expect his party to proceed as rapidly as we did, we do at least expect some great progress. [Interruption.] It is not 13 years since that Bill was passed into law. It is six months. [An HON. MEMBER: "It took 13 years to do it."] Many trade union leaders were consulted. I remind the House of the Carr Report. We had to carry the matter forward and convince both sides of industry, which is what we did through those 13 years. We then brought the matter into effect. We had a very good Act. I am merely encouraging the Minister to go forward and proceed promptly in the way we are trving to encourage him to do and for which we have provided.

I was reminding the House of the consecutive course of events—the Contracts of Employment Act and then the Industrial Training Act. We then considered redundancy and wage-related unemployment benefits. We considered this together. It is true that my predecessor was considering this and discussing it. We came up against a great deal of conflicting advice and consideration from both sides of industry in relation to this. After very full consideration, we came down firmly last summer on the side of wage-related benefits. We completed our consultations at this time and we were ready to prepare a Bill at the time. [HON. MEMBERS: "Oh."] That is certainly so. It must be within the knowledge of Ministers at present on the Front Bench that these discussions had been completed and that we had had agreement with both sides of industry in July of last year. The right hon. Lady the Minister of Pensions and National Insurance looks indignant.

Hon. Members

Where is the Bill?

The Minister of Pensions and National Insurance (Miss Margaret Herbison)

The right hon. Gentleman has said that there was a draft Bill ready for this redundancy payment.

Mr. Godber

No, I did not say that.

Hon. Members

The right hon. Gentleman implied it.

Miss Herbison

There was an implication. What the right hon. Gentleman is now definitely saying is that all the consultations have been completed by July of last year and that the Government of the day were ready to go forward with wage-related unemployment benefits. I wonder whether the right hon. Gentleman had some consultation, before he made this statement today, with my predecessor, the previous Minister of Pensions and National Insurance, to discover from him what a tentative and early stage the discussions were in between my Ministry and those concerned both the B.E.C. and the trade unions.

Mr. Godber

I would not need to discuss it, because I was present with the right hon. Lady's predecessor when the final discussions took place. I did not say that a draft Bill was ready. I said that we had completed our consultations and were ready for the drafting of a Bill. That is what I said. That is the position. That is what my right hon. Friend the then Minister of Pensions and National Insurance and I discussed at a meeting in a room in the House in July of last year with the representatives of both sides of industry, where we went through the whole matter in very great detail.

Mr. Eric S. Heffer (Liverpool, Walton) rose

Mr. Godber

No. I cannot continue giving way. I have given way to the right hon. Lady on this matter.

Mr. Hamling

The right hon. Gentleman has made certain statements.

Mr. Godber

I have made statements by which I am quite prepared to stand. I am not prepared, however, to go on giving way on detail. There will be plenty of opportunity for hon. Members, if they wish, to develop their points later. That would be the way for them to do so.

Mr. Heffer

But on a point of information.

Mr. Godber

I have given the information in regard to the point about which the right hon. Lady asked me. I said that we had had these discussions. This is perfectly well-known to many of the trade union leaders who were present at some of these discussions which I and the right hon. Lady's predecessor attended. We had these discussions. [HON. MEMBERS: "When?"] I have said that they took place last year, the last one in July of last year. That was the time—[Interruption.] That is a rather cheap comment to try to cover up these matters.

Mr. Hamling

Why did not the Conservative Party mention them at the General Election?

Mr. Godber

I wish hon. Members had taken the trouble to read our election manifesto. It would have done them a great deal of good. This was abundantly clear. This was the stage we had reached at that time. We had come down in favour of this.

I shall remind the House, before I finish with this, of the attitude of both sides of industry towards this matter. I want to come on to that in a very short time. One factor I want to make clear in favour of taking wage-related benefit first was the factor I have already referred to, namely, that voluntary provision for redundancy payments was spreading, whereas wage-related benefit must be a matter for Government action. Therefore, it seemed in some degree that it was right to allow the voluntary provision to carry on in the redundancy matters while we were going forward with wage-related benefit.

The Statist, of 26th February of this year, gave a good deal of information about the way in which that private provision was going forward. It quoted largely from the survey made in the time of my predecessor at the Ministry of Labour. It showed the way in which the growth of private schemes was going forward. It said that more than one-fifth of all engineering workers were covered, about one-third of all workers in the vehicle industry and nearly one-half of all workers in the chemical industry. It is rather interesting that the figures are so high for those industries. This article shows that it was building up. The figures were rising fast for textiles, food, drink and tobacco. There was this provision going forward all the time for private schemes in relation to redundancy payments. This was one of the factors which we took into consideration in deciding priorities.

However, we did not reach our decision in isolation, as I have told the House.

It was quite clearly the preference of both sides of industry that wage-related benefits should be taken first before redundancy matters were dealt with. The last occasion when we discussed this in the House was on 14th February of last year in a debate on the Redundant Workers (Severance Pay) Bill, a Private Member's Bill introduced by the hon. Member for Birmingham, Aston (Mr. Julius Silverman). I then told the House of the attitudes of both sides of industry. This is set out clearly in HANSARD. I spoke of the attitude of the B.E.C., which was firmly in favour of wage-related benefit. I said this in relation to the T.U.C.: The T.U.C. informed me that its General Council was to have further discussion about compensation for loss of employment, but that it was already agreed that no arrangements satisfactory to it could be obtained on matters which we had then discussed. The T.U.C. has subsequently told me that its General Council has completed its consideration of the Ministry's proposals. It reiterated its view that improvements in National Insurance benefits should have priority over any legislation about severance payments …."—[OFFICIAL REPORT. 14th February, 1964; Vol. 689, c. 779.]

Mr. Hamling

We have had that.

Mr. Godber

Hon. Members may have had some improvement, but they have not had a wage-related degree of benefit. They may have had some measure of improvement, but this is not nearly sufficient to deal with the case which we were considering from the point of view of wage-related benefit.

As I said earlier, we had these discussions with both sides of industry. On the last occasion, when the then Minister of Pensions and I met both sides of industry, we spent a lot of time discussing wage-related benefit in all its details. At the end of the discussion I brought up the question of severance payment and redundancy payment, and from both sides I was told that they would far rather go forward with the wage-related benefit first before any consideration was given to redundancy payment. That was quite specific from the leaders of both sides of industry. There is no question that this was the attitude on both sides at the time we left office. We reached our decision fortified by the views of both sides of industry.

What are the reasons for this consideration? The two different subjects are designed to meet entirely different matters. As the Minister said, redundancy payment is a form of compensation for loss of office whereas, wage-related benefit is designed to alleviate hardship. That is the clear distinction between the two. As I made clear, we on this side of the House are certainly not against redundancy pay. It is entirely a matter of priority. The Minister today is emphatic in believing that redundancy pay should come first. I take exactly the opposite view, for these reasons. The greatest need today—and I think that the Minister agrees with me here—is the modernisation of our economy. This is essential. The whole question of the mobility of labour is a key aspect of the matter, and we are reminded of this constantly by Her Majesty's present Ministers.

How these two different concepts face up to this need is something which I do not think the Minister fully developed in his speech, and I shall try to make good that omission. In redundancy in industry generally, one comes up against the principle of "last in, first out". That is generally endorsed by most workers as a fair principle. If we apply this test to the case of workers who become redundant, what do we get? When redundancy begins to arise in an industry, men who have been in that industry for a relatively short period are always the first to be affected.

This means that under the present Bill or under any redundancy scheme which is related to length of service, these men get the smallest redundancy payment. Therefore, in the initial stages of redundancy at least, these men who will feel the effect of redundancy first know that they will get the smallest compensation for loss of office.

The Minister talked a good deal of the need to get a fresh attitude to cooperation in industry and the elimination of restrictive practices. I put it to the House, the proper way to achieve what the Minister wants to achieve is not by ensuring that the workers who feel the impact of redundancy first get the minimum help from the scheme. If we compare that system with that of wage-related benefit, under the latter system the direct impact and the full effect of wage-related benefit goes to the first man to become redundant, however long or however short a time he has been in employment. From the point of view of social justice, that must be right.

It may seem right that the man who is in employment longest should get the biggest amount, but from the point of view of mobility of labour it must be right that whoever becomes redundant should receive adequate compensation and protection against loss of employment. Workers in industry today are affected very much by the conditions in which we live and by the fact—nobody blames them for this—that so many are committed heavily in terms of hire-purchase arrangements and other matters. They are living up to the extent of their income. This being so, a man who becomes redundant faces very serious problems immediately.

I accept the point that in some degree unemployment benefit has been increased, but it has not been increased enough to help materially in this way. This is where wage-related benefit is tailored to meet this demand. Wage-related benefit provides adequately for the worker who becomes redundant, whether he has been in employment for only a short time or for a long time. It provides him with security during transitional unemployment.

Mr. William Molloy (Ealing, North)

Would the right hon. Gentleman not agree that in this context when we are talking about compensation for loss of office, it must follow that the value of loss of office to anyone who has contributed in an industry, say, for 13 or 14 years must be more than if he had been working in that industry for only three or four years. Is that not the principle of the Bill?

Mr. Godber

I am sorry, but the hon. Member has not followed my argument. May I take him back? I have tried to distinguish clearly between compensation for loss of office and for hardship. They are two entirely separate things. The redundancy Bill is designed to deal with the compensation point, and I agree with the hon. Member that when considering compensation it is right that the man who has served for the longer period should have more. But this is why I said that this is not the right Bill for the present time.

The scheme which deals directly with hardship is the one which is more appropriate here, and that is what wage-related benefit seeks to do. When dealing with the matter purely as one of compensation I agree with the hon. Member and, although I want both types of scheme to be introduced, I prefer that the other scheme dealing with hardship should be brought in first. The Minister took exactly the opposite view in his speech.

Mr. Gunter

I want to keep the record straight. I am following the right hon. Gentleman's argument with a good deal of sympathy, not upon the question of priorities but on the difference between compensation and wage-related benefit. The right hon. Gentleman said that the previous Government had reached a certain stage in connection with wage-related benefit. Am I to understand that they intended to deal with that matter in isolation from the general pattern of National Insurance, and that sickness and industrial injuries were to be kept apart?

Mr. Godber

I have not a copy of our manifesto at the moment, but I am sure that we said that we would deal with wage-related benefit and sickness. I think that we included sickness. From the social point of view it is right that we should deal with the whole lot, but from the point of view of the mobility of labour I felt that one was justified in dealing first with wage-related benefit and sickness.

Mr. Gunter

That is what I wanted to get at. The right hon. Gentleman said that at a certain stage he had agreement with the T.U.C. and the employers. My recollection is different. My recollection is that they would not agree to related benefit unless the whole of the scheme was dealt with.

Mr. Godber

That is not my recollection. I am sorry that there is this difference. We had these detailed discussions relating both to unemployment and to sickness. These were the two issues on which we had these main discussions. Certainly, there were discussions on the other matters, but we made clear that these two were the matters to which we gave priority. Certainly, the T.U.C. for a long time said that it wanted all these matters discussed, but we made clear that we felt that we should distinguish these two and go ahead with them. This is the basis on which we were operating, and if the right hon. Gentleman studies our manifesto for the last General Election he will see that we made this abundantly clear at the time.

Miss Herbison

The right hon. Gentleman has now said that there had been discussions with the T.U.C. and the B.E.C. and that although the T.U.C. wanted something wider it was finally decided that it should be wage-related sickness and unemployment benefit. I should be extremely interested to know what agreement was reached on both sides of industry in the discussions about which the right hon. Gentleman is now speaking. Was there agreement, or did the then Minister decide in the face of disagreement on both sides of industry that he would go ahead with a scheme on his own, unlike the present one which was negotiated between both sides of industry? I should like to know and I think that the House has a right to know.

Mr. Godber

I must make this matter clear. I thought that I had already done SO. [HON. MEMBERS: "No."] We had these very full discussions and there had been agreement from both sides of industry that wage-related benefit should precede redundancy pay. This was the point on which there was agreement. The level at which it should go forward and the way in which it should be done was, of course, a matter for the Government of the day. We had no agreement on the precise terms. Of course we had not, but we had agreement. [HON. MEMBERS: "Oh."] Why do hon. Members make strange noises? We had the clear agreement of both sides of industry, who wished to proceed with wage-related benefit first.

That was the point that I was making. That is the point in relation to the whole argument. There is no reason why one should make any mystery about this.

The Chancellor of the Duchy of Lancaster (Mr. Douglas Houghton)

The right hon. Gentleman got nowhere.

Mr. Godber

I do not know why the right hon. Gentleman should say that. He seems to be peculiarly ill-informed.

We had these valuable discussions on which we had clear agreement on the basis that we would go forward with wage-related benefit first. This is the point on which we were going forward, and, of course, the scheme would be a scheme produced by the Government. That is always the case, and the right hon. Gentleman knows that perfectly well. The whole basis of my argument is simply that both sides wished for wage-related benefit first. This is why we took the line we did.

I have gone into this matter at great length. I hope that it is entirely clear now that there was this support from both sides so that the priorities were right. The whole question of mobility of labour is the one which is at the hack of all this. I made clear a short time ago that a redundancy payment system cannot help in the same way as wage-related benefit, for the reasons which I have given. A redundancy scheme gives justice to the long-serving employee but it does riot give that general overall sense of security which we believe is necessary in the modernisation of the economy.

The last sentence of the quotation which I made earlier from the Statist says: Significantly, countries with a statutory wage-related unemployment benefit scheme, usually dispense with compulsory severance pay altogether. It is, therefore, clear that a statutory wage-related benefit scheme ought to provide a very great proportion of the need, certainly in the matter of mobility of labour.

The need to undermine resistance to change is something on which we all agree. The Minister himself touched upon restrictive practices. The Financial Times of 7th January summed up the matter clearly at the end of an editorial when it said: But the fact remains that the Government has given priority to the wrong measure. Severance payments may be a matter of social justice but there is little reason to suppose that they will encourage mobility of labour as much as would the introduction of wage-related unemployment benefits. Greater economic efficiency, as the Labour party admitted in its manifesto, must precede the improvement of social security schemes. In this case, despite the clearly expressed opinions of both sides of industry,"— this bears out what I was saying— it has given economic efficiency second place. This exactly bears out the argument which I have been seeking to develop.

Redundancy pay, also, could actually operate against mobility. This is the point which I do not think the Minister faced sufficiently. This can happen. The right hon. Gentleman quoted The Times. I give him a short quotation from The Times of 7th December, when, in relation to redundancy pay, it said: Like so much else that is desirable it will in itself add to labour costs, and there is a danger that the cost may discourage employers from economising in labour. I do not want to set this argument too high, but it is an argument which I have heard used on a number of occasions and one in which there is some validity—that in certain circumstances an employer having to pay large lump sum payments might keep employees longer than he needs hoping that he might have some justification for continuing their employment. This is an argument which hon. Members should bear in mind in relation to redundancy pay. In certain circumstances it could definitely operate against the mobility which we all want to achieve.

Mr. Heffer rose—

Mr. Godber

No. I have given way a good deal and I should be grateful if I were allowed to continue.

This argument which I am developing applies particularly to some of the smaller firms. They would feel the impact of lump-sum payments considerably. I accept that a good deal of the Minister's measures will help, but I think that there is a great deal in this argument and that it is a further reason why I feel unhappy about the right hon. Gentleman's order of priorities. Not only must there be general and ready mobility of labour as demand changes, and new techniques and developments emerge, but there is something more fundamental in all too large a sector of our economy. There is, in addition to other restrictive practices, the particular problem of overmanning in some industries. There is an unnecessarily high level of manpower over a substantial field.

I have never blamed the individual concerned, but we must face the fact that what is needed is an undermining of the resistance to change. I do not blame the individual. After all, who wants to work himself out of a job when he does not see immediate security thereafter? We therefore want measures which are tailored to give a man the security which he needs if he is to change his job. This is why I plump strongly for wage-related benefit, because at the right level, with the measures which we instituted and which the present Government are carrying on for training and retraining, this can provide the greatest assistance to the worker who has to face change and get another job, but, who, at the same time, expects the State to assist him not to fall too much below the standard of living which he is at present enjoying.

Unquestionably, although the redundancy provision could help some workers in this way to the same degree, there are many which it will not. This provision will be much more uneven in its incidence. If hon. Members talk to people on the pay-roll of any factory or works they will find a big imbalance between the element of security which this will provide for different people whereas a wage-related benefit would be entirely different. If we want to see the effective use of manpower, we really ought to study these points. This is why I say that the Minister's priorities are wrong.

The effective use of manpower is at the very foundation of our competitive position in the world and of our desire to see high earnings which, in themselves, do not lead to inflation. High earnings coupled with high output is what we all want. This requires the fullest use of manpower, and it means that overmanning is really the one crime which the community cannot afford today.

These questions are of particular importance, also, because of the changing manpower pattern in the country. This was brought out very clearly in the first Report of the Ministry's Manpower Research Unit in September last year. In the conclusions of the general survey, on page 35, it was said: It seems probable therefore that total manpower resources will be no more than adequate during the period". This is the period of the next 10 years. The efficient and flexible use of manpower will therefore continue to be of the greatest importance". A little further on it was said: Efficient manpower utilisation will therefore become even more essential if the task of maintaining and raising the general standard of living is to be successfully achieved with a labour force which will be smaller in relation to the total population". The point was brought out most clearly in that Report that the labour force in relation to the total population will be falling during the next 10 years. Because of all these factors, the changing patterns of employment, the fact that people are staying longer at school or continuing longer at education in one form or another, that people are retiring earlier in some cases, and that the school-leaving numbers will not be quite so high for the next five years—all these factors form a cumulative pattern which means manpower shortage. It adds particular importance to the need for some project, and particular importance to the need to have the right priorities. This is why I regret that the Minister has not taken the priorities which I hoped he would.

So much of government, of course, involves a decision on priorities, sometimes between two or three projects all having some good points in them. This Government have already made many wrong decisions on priorities, and I am sorry to see the Minister of Labour adding to them today. Just as an encouragement to the right hon. Gentleman on this matter of priorities, I quote his own words on 16th March last year: I say at the outset that I hope that none of us, trade unionists, industrialists or Members of the House of Commons, will be too much obsessed by the enormous difficulties, for if we are we may fail to present to the people of this country the glorious opportunities which await us if we are prepared to adapt and adjust ourselves to what is coming. Whether that was a threat in relation to the coming General Election, I am not quite sure.

Mr. Hamling

Scientifically based.

Mr. Godber

Yes, very scientifically based. The right hon. Gentleman went on: Severance pay is very important, of course. It is one of the most important aspects of the matter with which we have to deal. But, for heaven's sake, let us not make it the priority." —[OFFICIAL REPORT, 16th March, 1964; Vol. 691, c. 1044.] Those are the Minister's own words, and I quote them to him for what comfort they may give him.

Before I come to the details of the Bill, I make one further general point on the question of redundancy caused by Government action. There will be such redundancy. Only recently, we have had the critical case involving aircraft workers, and similar events could occur again. Changes of policy can occur whatever Government are in power. I accept that. [HON. MEMBERS: "Hear, hear."] I am seeking to present as fair a case as it is possible to do, and I hope that hon. Members will appreciate that. It can happen, and I am suggesting to the Minister that, when redundancy is clearly caused by Government action, there should always be some help from the Government of the day in regard to the lump sum redundancy payments which must be made.

In the case of the aircraft workers, we have been told that the Government will be sympathetic. But this is an administrative action on the part of the Government. I put it seriously to the Minister that he ought to consider including in the Bill a Clause making suitable provision so that firms will know, and have confidence in knowing, that, if cases of redundancy arise which can Clearly be shown to have been brought about by Government action, the Government will bear at least a portion of the lump sum payments.

I ask the right hon. Gentleman seriously to consider that suggestion between now and the Committee stage. It would be quite easy to draft such a provision, and we should be very glad to help the Minister by putting down a new Clause in Committee to deal with it.

Mr. Gunter

No doubt.

Mr. Godber

We always try to be helpful to the Minister. The trouble is that he does not always appreciate it.

I have spoken at length on the general principles, and I turn now to the details of the Bill. Inevitably, this is a detailed and involved Measure, and, as I have said, we shall wish to scrutinise it extremely carefully.

First, I take up the question of the degree of funding which the Minister is providing for. It is to vary from one-half to two-thirds of the total cost, according to the age at which redundancy occurs. I tell the Minister at once that I regard this as a good provision. It will make the whole position much easier, particularly for smaller firms. Whether it could or should have been carried further, whether there ought to be a higher degree of funding, is a question which we shall wish to consider again in Committee. The Minister introduced interesting arguments about why there should be a substantial proportion borne by the individual employers. I accept the validity of a good deal of his argument. It is a question of degree rather than of principle, and we shall consider it further and study what the Minister has said about it.

Next, I take the whole scale of the redundancy provision under the Bill. As the Minister himself said, this is higher than in voluntary schemes generally today. It could be a heavy burden on some employers, and I wonder whether the scale ought to be as high as it has been put. The Minister said that it was a minimum and it would be possible to have schemes at a higher level, voluntary schemes going beyond what the Bill provides. I suggest that it is a little unrealistic, having put the provision at this level, to expect many people to go higher. When we were considering it, we had in mind something at a lower level definitely as a minimum, with an encouragement to people to provide more by voluntary schemes.

There is a definite advantage in firms proceeding with voluntary schemes by negotiation with the unions. I think that it helps to promote good relations in industry. Therefore, I am rather sorry that the Minister has put the provision at the level he has, which will, I think, militate against getting more voluntary agreement. I should like to have seen the level lower, with encouragement to private negotiation between unions and employers with a view to building on to the scheme which the Minister himself lays down. I think it unlikely that there will be additional voluntary provision on any considerable scale.

I concede that the problem of definition is difficult, and there are real dangers here. Large sums of money can depend on whether a man has been dismissed for misconduct or on whether he should have been declared redundant.

This is a most difficult issue. The phrase "suitable employment" can mean something very different to different people, and we shall wish to consider this precise point with great care. My hon. Friend the Member for Aylesbury (Sir S. Summers) referred to it earlier, and I think that everyone agrees that it could cause a great deal of difficulty.

It is one of my anxieties that there shall not be too much danger of misunderstanding because, otherwise, we shall be doing the very reverse of what the Minister wants. We shall be helping to exacerbate feeling in industry. If we do not get a clear definition, there will be a very real risk of bad feeling between the employer and the worker if the employer feels that no redundancy payment is necessary and the worker feels that one is. We must have as clear a definition as we can.

I agree that the question of tribunals and the extent to which they will be able to help, becomes very important. I am not sure about the principle of utilising for this purpose the tribunals set up under the Industrial Training Act. I should like a fuller explanation of this in Committee. Those tribunals had a particular task, and this one is entirely different, and I wonder whether it is right to have the same tribunals. If it is, there are administrative advantages which I accept at once. I was interested in the Minister's speculation whether they might be led on to deal with other things, but it may mean an entirely different type of personnel for the tribunals from what we envisaged in the Industrial Training Act. Whether this can be incorporated is a matter to which further consideration should be given.

I turn to Clause 8 and the question of the starting age for benefit. The age seems to be very young, and I do not think that the Minister has justified starting at it. Here one comes back again to whether one is giving compensation or whether one is dealing with hardship. If one is dealing with hardship, I accept it, but compensation for loss of work at 21 seems rather difficult to justify, and I think that it works against the best principles of the Bill and increases the imposition on the employer in a way I would not have thought necessary in this case.

Then there is Clause 33 and the question of strikes, to which the Minister referred in some detail. I think that we are on a point of major importance here, and I am not surprised that the Minister spent some time dealing with it. I will not follow him in requoting some of the speeches in the Standing Committee on the Trade Disputes Bill, which we have had at great length, on the whole question of breach of contract in regard to strikes, for we shall have the opportunity of going into this further. However, I think it relevant to quote to him in regard to this matter the comments of British industry.

An article on 15th April in British Industry, issued by the British Employers' Confederation, stated: The Bill adopts the continuity rules of the Contracts of Employment Act but amends that Act by removing the provision that a strike in breach of contract breaks continuity. This has no doubt been done because the Minister of Labour takes the view that, following Rookes v. Barnard, most strikes are in breach of contract. But Parliament may well feel that the remedy is worse than the disease. If unconstitutional strikes can no longer be defined in relation to breach of contract, it is surely not beyond the wit of parliamentary draftsmen to define them in other terms. What is unacceptable is that when new benefits are given in relation to continuous service with an employer it should be expressly provided that continuity of such service is unaffected even by the most irresponsible unofficial strike. We do not—[Interruption.] I was quoting the employers' point of view. The Opposition's point of view in regard to these matters has been made abundantly clear in the Standing Committee considering the Trade Disputes Bill, where we have gone into very great detail.

We do not believe that it helps the Minister or anyone else to appear—if it is only "appear"—to be encouraging an unofficial strike and unofficial action. [HON. MEMBERS: "Nonsense."] It is no good hon. Members opposite saying "Nonsense". This is our belief about it. We believe that it can be so interpreted in dealing with the matter in this way. The Minister implied this in his speech. He said that it was a very difficult decision that he had to take, and he gave us the pros and cons which he had advanced, and it was clear that this was in his mind. I think that the Clause is a very unfortunate one, and that its effects will not be helpful for the reasons which I have given.

I have indicated certain matters that we shall want to probe deeply. There are many other points which need a great deal further attention. This is a Bill which embodies a good principle, but it has certain bad aspects. It is brought in in the wrong order of priorities, and it is brought in at the wrong time. We shall not oppose it, but we shall certainly seek to amend it and shall press the Minister most urgently to bring forward proposals dealing with the other aspect which I made clear, which is much more designed to meet the needs of the country today, and which we feel that the Minister has failed the House and the country in not bringing forward at this time.

5.25 p.m.

Mr. H. Boardman (Leigh)

When my right hon. Friend introduced the Bill he made reference to the "golden handshake" which had been paid to a number of higher executives. If I may say so, I thought that that was a very bad analogy. There is no question in this Bill of a "golden handshake" for the workers. It has been referred to in one of the daily newspapers as a "brass handshake". But it is not even that. I am not quite sure what it is. I should have thought that in the first place it was a reward for long service, but as the benefits are tapered off as a man approaches his 65th birthday so that in his last year of normal employment he can receive no benefit which would give him any advantage over the position had he not been declared redundant, it does not seem to me to be a reward for long service.

I think that possibly this is a Bill to provide a degree of compensation for people who lose their jobs through redundancy, and the compensation amounts to nothing more than a sum given to cover the disturbance and hardship, or even distress, following the declaration of redundancy. But it does not discriminate between a man who steps immediately out of one job into another and one who car not do that. It makes no provision for the man who, by reason of his trade, or the location of his industry, may have considerably more difficulty in getting re-employment than men employed as, for the sake of argument, engineers in the Midlands motor towns.

It happens that the two predominant industries in my constituency remain—I say "remain" at one time they were the only industries—coal and cotton. They are two declining industries. I do not need to tell my hon. Friend the Parliamentary Secretary how many people have been declared redundant in the cotton industry or the difficulty which many of these people have had when their mill has closed down. If there is redundancy in the cotton industry, these are not the sort of people who can step immediately from one job to another. They are people who, after many years in a highly skilled occupation, have to go roaming round the country to find occupations as unskilled workers, particularly in the Midlands and the South. I should have thought that the Bill would discriminate in favour of them and others similarly placed.

The same thing applies to the mining element in my constituency. A number of pits have been closed. I am very grateful that many of the people who might have expected redundancy notices have been absorbed in other pits in other areas. But there are still people who will be declared redundant in the mining industry and will have the utmost difficulty in finding other employment. It does not need a lot of imagination to realise that when a man has spent 20 or 30 years working underground as a mine worker he is not regarded as the most easily adaptable man for work in some other occupation.

The Minister said that provision was made for assistance towards removal expenses through other legislation. I want to put it to my hon. Friend the Parliamentary Secretary that it really is not only a question of assistance towards removal expenses. If we take any of the people in my area to whom I have referred, in the cotton and the mining industries, it is ten to one that they are living in council houses. If they have to leave the area and look for work in another part of the country there is not a cat in hell's chance of their getting on to a council house list. Therefore, the first thing they will have to do is to find the necessary deposit to put down on a house. That is the only means they will have of getting a roof over their heads.

There was a very great deal in what the right hon. Member for Grantham (Mr. Godber) said. I suggest that his reference to the principle of last in, first out, is something of which we ought to take full cognisance. I hope that the House will not think that I am overstressing the difficulties of my own area, but, bearing in mind that it is only a matter of three or four years since the textile industry started to look up again after a long period of depression, nearly all the people in my area who lost their jobs in the textile industry during the recession are the people who would come into this category of last in first out. Because these people have suffered the ups and downs of an industry whose whole history has been comprised of ups and downs, they are going to receive the smallest benefit.

There is something wrong with this and I hope that the Minister will look at the whole system of assessing these benefits afresh. For instance, I do not see any reason why the assessment of one and a half weeks' wage and one week's wage should be made on service over 40 years of age and service under 40 years of age. I believe that what is very much more important is whether a man loses his job around 40 years of age, because we all know, unless we are speaking of skilled employees, that for a man of 40 to lose his job it really does matter.

If an employer has a choice of employing a young man in his early 20s or an older one, I would not blame him, all things being equal, if he gave the preference to the younger man. Therefore, it seems to me that what we should be concerned about is not the man's service after 40 years of age going towards the higher benefit of one and a half week's wages, but rather with the fact that he should be getting the higher benefit after he loses his job round about 40 years of age. I think that if the benefit could be based on the principle that at 39 a man would receive compensation based on one week and one-tenth of a week, then at 40 years of age the benefit should be one week and two tenths, and so on, so that at 43 years of age he would be entitled to a benefit based on one and a half weeks' wages, that would be much more realistic.

I have had much experience of these cases in areas where people have suf- fered because there is no diversification of industry, and I have come to appreciate that when a man is seeking unskilled employment the question of age can be a very serious impediment to his getting a job in his own area.

It seems to me that in respect of this benefit the Bill is long overdue. I welcome it in principle, but I should have been much happier if it had been a Measure which had been better designed to give the greatest benefit where there is the greatest need.

5.35 p.m.

Sir Spencer Summers (Aylesbury)

My right hon. Friend the Member for Grantham (Mr. Godber) devoted the earlier part of his speech to deploring the fact that the Government had got their priorities wrong and had not paid sufficient attention to the virtues in this context of wage-related unemployment benefit. I think that the speech to which we have just listened from the hon. Member for Leigh (Mr. Boardman) added strongly to the arguments of my right hon. Friend, for the cases which he cited in his constituency are precisely those cases which would need the help most of wage-related benefits. I was rather interested in what the hon. Gentleman said. If I understood him aright, not only was he recommending wage-related benefits but age-related benefits. This is certainly a novel approach, of which I hope we shall hear more in the future.

I do not want to go over the ground again concerning the question of priorities. It has been very adequately covered, but I want to draw attention to the fact that one of the regrets which have—I hope that as we have two Ministers concerned with the Bill they will not both absent themselves at the same time—is not only concerning the unsound priority given, but also the muddled thinking that has followed from choosing this priority and using it for the wrong purpose.

To my mind, it is quite clear that we have here distortions of the proper principle underlying a Bill dealing with redundancy to try to make it help people who need help and who would get that help had other priorities been chosen. It is for this reason that the minimum period is put at two years. This is quite unjustified on grounds of compensation and long service, but is possibly justified on grounds of hardship if there is a longish period between leaving one job and getting another. It is for this reason, no doubt, that 20 years is the limit for improving the payment under the Bill. It is possible that the need to give help where it is most needed is why we have this graduated system of half a week's payment for very young men and one week's payment up to 40 years of age and the larger payment after 40 years of age.

I cannot for the life of me see why more compensation should be due for a year's work at the age of 41 than for the same period of work at the age of 39. One could understand the motive of the drafters of the Bill if they were seeking to do two jobs at once and fill the gap which will exist until wage-related benefits come along. But in my judgment this has led to confused thinking and distortion which ought not to be there. Moreover, in so far as this is a Bill properly conceived in terms of compensation, it is in my judgment—and I call in aid the speech which I made on 14th February on this point—perfectly fair that the burden should fall on the employer or on employers as a class, but when we get beyond that into the field of hardship, which is what the wage-related benefit was designed to deal with, then it is the taxpayer rather than the employer who can be called in aid.

The second complaint I have, therefore, on grounds of distortion is that, for the reasons I have given, not only are false arguments afoot here, but the employer is called upon to pay for purposes for which the taxpayer alone should be called upon to pay. Of course, the principle of making payments on redundancy based upon length of service compulsorily is not a principle which anybody could possibly oppose, and, therefore, one has no hesitation whatever in supporting the proposition that this Bill should have an unopposed Second Reading, but I think that for the reasons I have given there are a very great many defects in it to which I should like to make a few brief references.

My right hon. Friend referred to the proportions into which redundancy pay- ments are to fall as between an individual employer concerned and the fund to which all employers are to contribute, and they are on the average, we are told, 40 per cent. and 60 per cent. I would have thought in the first place that it would have been much simpler to have put down what payment is due to a man and then say quite simply x per cent. shall be found by that employer and the balance by the Fund, instead of having the elaborate rigmarole in the Clauses of the Bill about what proportion should fall on the employer and what proportion should fall on the Fund.

I think there is a great deal to be said for making the larger share fall upon the Fund. I think that there is little doubt that there will be a labour shortage for many years to come—

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Ernest Thornton)

I think we might just clear up this point. I do not think there is a rigmarole at all. My right hon. Friend pointed out the reason—I think it is a very good reason—why two-thirds of the payment should be made from the Fund in respect of service over 41 years of age —so as not to deter an employer from taking on a person over 40 years of age.

Sir S. Summers

The Minister will, therefore, go a long way with me when I say that if the percentage coming out of the Fund were still higher than 60 per cent. there would be a still greater incentive on the employer to take in older men.

All I am saying is that instead of seeking by rather subtle distinctions to place all the over 40 years of service on the Fund and only part of the years of service under 40 on the Fund—by that rather devious thinking requiring quite elaborate wording in the Bill—it would be much simpler, in my judgment, to say that of the amount due to a man on redundancy 75 per cent. shall come out of the Fund and 25 per cent. from the employer. That seems to me a much simpler way of doing it and of making it better understood by those who are to operate the scheme. I think there is a great deal to be said for placing more than the Bill does upon the Fund, as an encouragement to employers to declare workers redundant if there is a borderline case.

We all know, as I was saying, that there is likely to be a dearth of labour for a long time to come. We also know that in many industries labour which ought to be squeezed out for more useful purposes is harboured, and the more redundancy payments are placed on the Fund the more prospect there will be of squeezing out skilled workers in particular for the benefit of other industries.

I now come to some of the more detailed aspects. I have already said that, to me, the proposition that compensation should start at 18 is to place it at much too young an age, and to that, of course, is related the proposition that once a man has served for two years he becomes eligible for redundancy payments. I would have thought that nothing under five years should constitute a valid claim for compensation, and I would have put it at 25 years of age. If somebody has worked five years with a firm I would say let him be eligible for whatever redundancy payments are arranged.

As to the amount of payment, I think that as the Bill is drafted there will be very large sums paid out. We are told that something of the order of £25 million per annum is the assessment of the amount to be paid, £15 million by the Fund and £10 million by individual employers concerned.

I have a rather difficult point to express, and I hope I do not fail. One of the consequences of the Bill being drafted as it is is that the maximum limit is 20 years' service; that beyond that a man cannot improve his position, though he have 35 or 40 years' service; he cannot count more than 20 years' service. I should have thought that it would have been much fairer to have made it 40 years, if hon. Members like; but, right up to 40 years, I would say that a man with 40 years' service deserves in this context a higher reward than a man of 20 years' service. But he is denied it, and the reason he is denied it is partly because £40 a week is the maximum sum which is to be taken into account, and that, coupled with the payments for years of service over 40, will result in very large sums being paid.

If an indefinite number of years up to 40 is to be used as the calculation, I would myself much prefer a straight proposition, a week's pay for a year's service irrespective of whether the man is aged 21 or 41 or 61. This is much more easily understood, for one thing, and, on grounds of compensation, surely there is really no greater claim for a year's service at 61 than at 41 or 31.

If there were a limit of 40 years, at one week for each year's service, coupled with a £30 maximum, then the man would get the same in the end if we are to keep the same total permissible under the Bill, a £30 limit per week and 40 years' service, at one week's pay for each year's service, that would produce what would seem to me to be a much fairer proposition than the one we have in the Bill. I hope we shall hear more of this in Committee.

We are told that, with the exception of certain industries described in the Bill and referred to by the Minister, this is to apply to everyone, including domestic servants. I think there is a great danger, when we are talking about topics such as this, where the views of the T.U.C. and the O.E.C. are concerned, of getting into the frame of mind that what is suitable for industry is necessarily suitable to everybody else who is employed. I can imagine quite a number of cases of people of very modest means indeed who employ one person for more than 21 hours a week and perhaps have done so for sometime who really could not face the prospect of the liability which would be placed upon them by this Bill. It is an untenable proposition to say, as is said in the Bill, that a domestic servant shall be deemed to be in a trade. Well, from that person's point of view, it could be construed that he or she has certain qualifications; but there is no profit about it, and I would have thought that all this business of redundancy payments should be confined to the field where there is either a profit or a loss. That should be the frontier within which we should be legislating, and where there is no question of profits the situation should be treated differently. I fear that if we include domestic service, particularly where there is no question of profits, we shall bring in cases where there may be considerable hardship.

I come now to the point that I made when I interrupted the Minister, namely, whether redundancy payment is to be deemed to be due when the employer is unable to offer a man further work of the type that he has been doing, and offers him another job instead. When I asked what fall in wages would violate the magic phrase "suitable employment", the Minister said that that would be for the tribunal to decide. If there is to be ease of access for everybody to a tribunal, there will be a large number of tribunals for there may well be considerable disputes under the Bill, which to my mind is extremely complicated. I think that some criterion should be laid down for the guidance of tribunals as to when a falling-off in wages is deemed to be unreasonable. Is 10 per cent. unreasonable? I answer that by saying, "Unquestionably no". Is 20 per cent. unreasonable? I think that with that figure we are getting a little nearer the borderline case.

If we are not careful, a man—or, for that matter, a tribunal—may construe a job in the same firm, at somewhat less money, as unsatisfactory. He will take the redundancy payment that is due to him and get a worse paid job in some other firm. He may be so keen to get his redundancy payment that he will put up with a worse paid job. Surely it would be far more satisfactory for him to take a somewhat lower paid job in the same firm, knowing full well that it would be deemed to be continuous employment, and that by clocking up more years of service he would ultimately be entitled to a still better redundancy payment?

I should have thought that there was a need to clarify what is extremely obscure in the Bill. Clause 2(4,a) refers to an offer of suitable employment in relation to the employee … To the lay mind it seems that it is within the discretion of an employee to decide for himself whether the offer is suitable. Is an offer at the same wages, in another part of the country, in another branch of the firm, to be deemed suitable? It is questions such as this which I fear will lead to a great deal of trouble if they are left to the ad hoc judgment of tribunals in different parts of the country.

I reinforce what my right hon. Friend said about Clause 33. It is wrong that we should lend colour to the proposition that agreements can be violated with impunity. This is the effect of Clause 33, with its impact on the Contracts of Employment Act, where it is said in so many words—and this is how it will be interpreted outside—that a man can break his contract of employment and it will not affect his continuity from the point of view of the notice to which he is entitled or his rights under the Bill. Surely we in this House know that the upholding of contracts is indispensable to good labour relations, yet here we are by this Clause undermining the sanctity of contracts which I should have thought was of the highest importance.

I was disturbed by what the Minister said about firms having to give notice of claims on the Fund. If I understood him aright, he claimed that this was a good plan because employment exchanges would have notice in advance of men who were likely to be made redundant and so be able to take proper steps to find other employment for them. That is a laudable ambition, and it is one of the functions of an employment exchange to find jobs for men, but if anybody who is obliged to render more than ten men redundant—and he would not do so unless he was obliged—has to give a month's notice, I think that this will act very harshly indeed on those who are not in a position to foresee as accurately as that exactly how many men they will have to declare redundant in the months ahead.

It does not always follow that one can see as far ahead as the Minister has in mind. If the purpose of the Bill is to get men out of employment that is no longer available for them and into more useful occupations, the sooner they are squeezed out, if that is not an improper word to use in this context, the better, and I fear that the length of notice suggested by the Minister may have unsatisfactory results.

I am sure that the Bill will do some good, but I am equally sure that unless it is drastically amended in Committee to confine its purpose to the proper purpose of compensation, and not have it distorted by an attempt to make it do the job of wage-related redundancy payments at one and the same time, we shall get into a thorough mess as a result of it. I hope, therefore, that we may get some help in seeking to confine it to its proper purpose, that of compensation.

5.58 p.m.

Mr. Tom Bradley (Leicester, North-East)

I found the speech of the right hon. Member for Grantham (Mr. Godber) confusing. I was never very sure whether he was taking personal credit for the Bill or whether he was seeking to dissociate himself from it ever so gently. Whatever the arguments may be about priorities, there ought to be no dubiety about the aims and purposes of the Bill. It does not set out to provide resettlement payments for people who are temporarily employed between one job and another. As I understand it, it is a straightforward severance payments Bill to give compensation for loss of office. There ought to be no dubiety about that.

I disagree with the right hon. Gentleman's views about priorities. I think that the Bill will be good for the psychology of industry, and I welcome it in principle. It marks a great step forward in the direction of improved industrial relations and the new concept of partnership in industry. I am sure that it will help my right hon. Friend considerably to get that spirit of harmony in industry to which he has dedicated himself.

In recent years there has been a strong tendency to condemn workers who resist dismissal through redundancy. The hostile reaction of most railwaymen to the Beeching proposals exposed them to the charge of being Luddites, a charge which persists today in view of their attitude to liner trains. This is not the time for me to venture into commenting on that, except to say that to condemn the attitude adopted by the railwaymen indicates a total failure to appreciate what the loss of a job means to a working man, especially if his employment has been of long duration. Such a man has invested his life in the job. An involuntary loss of his job represents a shattering blow to his sense of security and frequently leads to considerable domestic upheaval, disturbance and disharmony in the home. It is hardly surprising that from a worker's point of view the only acceptable solution to redundancy is to avoid it.

Nevertheless, we would probably all agree that the application of technological and scientific progress to economic growth inevitably involves change. We are reconciling ourselves to the fact that any man's skill today may be rendered obsolete more than once during his working life. It is also true that in a dynamic, free and prosperous society, where there are many changes in consumer demand, there must be an element of mobility of labour. But a just society must equally require that the worker involved should not suffer as a consequence. Community interests must not be satisfied at the expense of the individual.

It seems manifestly unfair that the introduction of new machinery and computers, which increase the profitability of industry, has frequently resulted in the loss of workers' jobs without adequate compensation. Sometimes there is no gold watch—there is not even a warm handshake—to mark the abrupt departure of workers from their jobs. Takeover bids, of which we have seen many in industry in recent years, involve no legal liability on the part of the new owners to make severance payments, yet the directors in the outgoing firms or the firm which has become submerged in the take-over bid often receive a golden handshake. The enormous publicity given to this has highlighted the difference between the two sides of industry and sharpened the awareness between workers and management. My right hon. Friend's Bill recognises this fact. The formulae which he has evolved for severance payments will remove some of the hardships involved in losing one's job.

But the Bill goes further than that; it will also do something to improve the status of workers. Ever since the war trade unions have been preoccupied in their traditional task of struggling for more money, and they have devoted proportionately too little time to seeking that wider range of fringe benefits which many workers enjoy on the Continent and in the United States of America. The struggle for improved status has taken second place, and in some respects an industrial worker is a second-class citizen when he is at work as opposed to his first-class political citizenship when at home.

I realise that to some extent this is a reflection upon the trade union movement, in the apparent slowness with which it has moved forward in respect of fringe benefits. Individual negotiations have been too slow, but they have succeeded over a fairly wide field, although only a quarter of the employed personnel in industry today is embraced by redundancy schemes. I disagree with the view expressed by the right hon. Member for Grantham that these schemes have been arrived a voluntarily. Some of us who have the honour to lead trade unions have had to bargain very hard indeed for the redundancy schemes which we have achieved for our workers. There was very little voluntary about them. The Bill will now extend to most people a basic sense of security.

When we talk about redundancy we tend to think exclusively of such groups as railwaymen, aircraft workers, and other workers associated with those of the great basic industries which have been declining in the past ten or fifteen years. I ask the House not to ignore the office revolution that has been going on. The introduction of sophisticated computers and accounting machines into commerce, banking and trade has caused a great deal of human dislocation in offices.

On the question of white-collared workers, I must, therefore, strike a discordant note. The Bill singles them out for special treatment—and special treatment of a most unwelcome kind—if they are members of a superannuation fund. I refer particularly to Clause 13. I was sorry that in going through his exhaustive survey of the details of the Bill my right hon. Friend for some reason did not deal with that Clause. I would have welcomed his comments on it. As I see it, it gives the Minister power to reduce or exclude redundancy payments in the case of an employee who is a member of a superannuation fund and entitled to a benefit right at the time of his redundancy. I hope that my right hon. Friend will have second thoughts about this Clause in Committee.

Sir S. Summers

Is the hon. Member referring to both contributory and noncontributory pensions?

Mr. Bradley

I am referring more particularly to contributory pensions and contributory superannuation schemes. If the Clause remains as it is now worded it may tarnish the aims and purposes of the entire Measure.

Many schemes have benefits which are payable at the age of 60 or thereafter. I agree that if a redundant worker withdraws his contributions from the fund on redundancy his redundancy payment might not be affected under the terms of the Bill. I hope that that is the case. But I am concerned about the other aspect of the problem, namely, that of the man who has reached the minimum retirement age when he is suddenly made redundant. It may be argued that such a person can draw his annuity, and that he would not be in very great financial difficulty. Nevertheless, my right hon. Friend should know that that is sometimes far from being the case. Not all superannuation schemes provide golden handshakes.

Many railway funds at the moment are not very generous. For instance, a man earning £800 a year, if made redundant at the minimum superannuation age of 60, would qualify for an annuity lower than the basic State pension for a man and wife. It is precisely these men in the no-man's land of 60 years of age who find it difficult or even impossible to find alternative employment. This is especially true of white-collared workers. For four or five years before such a pension is payable such a worker must exist on an income which experience — certainly among railway clerical workers—has shown to be inadequate.

But inadequacy is not the only point to be made in this connection. I do not see why, in any event, a man should be penalised by having his redundancy payment offset or denied on account of his superannuation benefit when he has paid heavily for it, or has contributed substantially towards it.

It may be argued that his contributions whilst a member of a superannuation scheme are no more than compulsory personal savings. I suggest, however, that his employer's contributions have also formed part of his remuneration, and have ceased to be his employer's money once they have gone into the superannuation fund. It forms part of the worker's salary just as much as any other emolument does in that respect.

I now pass to an even more substantial and important criticism of the Bill.

Apart from making the discrimination to which I have referred against white-collared workers, it does nothing to safeguard or protect the pension or superannuation rights of people who are prematurely made redundant well in advance of superannuation age. Let us consider the case of such a person. This man loses not only his job but his superannuation rights are also destroyed. He receives a double blow. Who in his new employment would admit him to a pension scheme at a late age of entry?

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Richard Marsh)

Would not my hon. Friend agree that this is a problem of pension schemes rather than one which arises from a Bill of this type? In fact, exactly the same problem could arise if an employee was dismissed or lost his job for any other reason.

Mr. Bradley

I am glad that my hon. Friend is following my argument. I shall deal with that point in a moment. I think that the case which I am advancing is logical.

This question and the allied question of the transferability of pension rights has been before the National Joint Advisory Council for many years, as my hon. Friend will know. The Minister has received many representations, and a substantial proportion has come from a body with which I am associated, the National Federation of Professional Workers. The National Economic Development Council, reporting in 1963 on Conditions Favourable for Faster Growth, advocated the transferability of pension rights in the interest of mobility of labour. Therefore I think this matter extremely relevant.

I should like my hon. Friend to consider the question as it affects a middle-aged man. If such a man belongs to a fund which allows his contributions to be left in and the benefits frozen until he reaches the minimum superannuable age, consider his loss. A man of 40 who freezes his benefits in such a fund will find that by the time he has reached the minimum retirement age the benefits will amount to half or even less of the amount of benefit which he could have expected had he continued until he was aged 60 or 65. Even that reduced benefit will be calculated in terms of a salary level in operation 20 or 25 years previously. That is not all. Had the man remained in his pre-redundancy employment he might have gained further promotion—surely a reasonable expectancy for a man aged 40 —and so his superannuation rights would have received a triple blow. Having regard to all the discussion which has gone on for so many years between the Minister, the trade unions and other interested parties, I very much regret that there is no provision for the protection of the pension and superannuation rights of a redundant man.

I wish to remind the Minister that in previous legislation—this was referred to by the right hon. Member for Grantham —there have been included details concerning compensation and the protection of pensions and superannuation rights of people made redundant in Government service. My hon. Friend will remember that transport legislation in 1947, 1952 and 1962 made specific provision for the protection of the pension rights of the redundant man. Added years were credited between the date of redundancy and his normal retirement date. The failure to put this sort of provision in this Bill will mean that some employers may be able to shelve their responsibilities. There is evidence to show that the effect of employees leaving without the full benefit of transferability of pension rights has reduced the future liability of employers to the Fund. Some firms have admitted that the credit which they gained outweighs the redundancy payments they are called on to make.

I hope that my hon. Friends have made a note of these reservations which I have made because, despite them, I welcome the Bill. I think it a striking advance on the unimaginative and ungenerous Contracts of Employment Act introduced by my right hon. Friend's predecessor. I believe this Bill is yet another indication of the endeavour of this Government to introduce a socially just society.

6.15 p.m.

Mr. John Page (Harrow, West)

I find it extremely disappointing that I cannot wholeheartedly support this Bill, as I have been a supporter of severance pay for a great many years. As the Minister said, the whole cost of the redundancy payment falls on the employer, and it seems—this is one of the two main reasons why I cannot support the Bill—that there is no reciprocity from the employee. I shall enlarge on that a little later in my speech.

In order not to give the appearance of pouring cold water on the Bill from the start, may I congratulate the Minister on certain aspects of this Measure. I congratulate him on the funding arrangements for the Redundancy Fund. A year or two ago, when I was studying this whole problem, I made inquiries about whether a consortium of private insurance companies could carry such a fund as this. I believe they would have found it extremely difficult to do so wholly on a private enterprise basis and without Government backing. It would be interesting if the Joint Parliamentary Secretary could tell us whether there has been any discussion with insurance companies about the funding for small and medium-sized firms, and for individuals, of their share of the redundancy payments.

I am glad to see the arrangements proposed by the Government for taking over the responsibility for redundancy payments in the event of a company becoming insolvent. When a company goes bankrupt is the time when there is most likely to be a substantial number of employees declared redundant. In contradistinction to my hon. Friend the Member for Aylesbury (Sir S. Summers), I think that the encouragement to employ people over 40 is rather neat, and I commend the Minister for it. Again in disagreement with my hon. Friend, I am glad to see that bona fide employees are covered by the Bill. The clerk in the small office; the domestic servant; the dentist's secretary—all these are covered. In the past many people employed singly have not received the proper reward for long service to one employer.

Sir S. Summers

My hon. Friend will remember that I did not seek to distinguish the person employed alone, but the person whose employment has nothing to do with trade or profit.

Mr. Page

I remember that now, but I cannot see how it is possible for a distinction to be made easily. Except perhaps that if a single employer at the time when the Bill came into force was over 60, and it might be made a provision that a larger proportion of the redundancy payment could be borne by the Fund. That is a matter which can be discussed during the Committee stage.

I wish to turn to a particular aspect which was dealt with in an interesting and knowledgeable manner by the hon. Member for Leicester, North-East (Mr. Bradley). I sincerely hope that the notes of the Joint Parliamentary Secretary will be passed on to his hon. Friend the other Joint Parliamentary Secretary, because they contain a particularly important aspect. Occupational pension schemes as they now stand seem to be covered by Clause 13. As I am not a lawyer and this is a very difficult Bill, I regret to say that Clause 13 is not completely clear to me. My reading, which is different from that of the hon. Member for Leicester, North-East, is that the Minister would be allowed to exclude or reduce redundancy payments in certain cases where employees are covered by occupational pension schemes, and that he may do this if the employee has the right to receive a periodic payment—which, I imagine, is a pension paid each month or at some other period—or a lump sum at some later stage. However, it says in Clause 13(3) that, in any case, a lump sum no smaller than that required under the Bill shall be an option available to the employee at the time that his redundancy is declared.

I am anxious about this Clause, because, if my interpretation of it is correct, it means that the Bill is leading management, in their thinking about pensions, in altogether the wrong direction. Redundancy and change of occupation, as has so often been said by my right hon. Friend the Member for Grantham (Mr. Godber) and others of my hon. Friends on this side, should be arranged by wage-related unemployment benefit, retraining and mobility allowances and so on. What I think the Minister should be trying to do in this and other legislation is to encourage occupational pension schemes which will allow a man, when he retires from his occupation, to have a further pension to supplement his State pension. That seems to be a much better proposition for an employee than to receive a lump sum at any time.

It would be interesting to know whether, under Clause 13, pension schemes can be frozen at the discretion of the Minister and, at the time when a redundancy is declared, the pension rights of the individual could be held, possibly, until the time when he is normally allowed to take the pension. I am afraid that I have not been able to make this very clearly, because it is extremely difficult and I am not an expert on these subjects, but I hope that the hon. Gentleman will examine the speech of his hon. Friend and that we shall be able to support his hon. Friend in any Amendments which he may put down in Committee, which I am sure would be a great improvement to the Bill.

I should like to turn to my main criticism of and disappointment with the Bill. What should be the objective at the present time of all industrial legislation? Surely this must be the objective concisely stated in the Joint Statement of Intent on Productivity, Prices and Incomes, to which the Minister of Labour is a signatory. That is, to achieve and maintain a rapid increase in output and real incomes combined with full employment. This objective can only be achieved, first, by the introduction of new production methods and by getting rid of restrictive practices; secondly, by —I quote again from a recent speech by the Minister of Labour—a new sense of responsibility and discipline and the honouring of agreements.

Does the Bill help towards achieving these aims? I believe that it helps in one way only, and that is by providing a new buffer between the employee and his fear of loss of security, on losing his job through technological change. This is an extremely worth-while object, as my right hon. Friend said, but if this is what the Minister wanted to do, this is not the Bill which should have been produced to do it.

If the employees in industry and elsewhere are hungry for security in this time of change, it would be beter if the £30 million or £40 million a year which this may cost industry as a whole—supplemented by contributions from employees —were put together and made into a worth-while policy for a wage-related unemployment benefit scheme, coupled with an improvement in the Government training centres and worth-while retraining schemes. The Bill is not the best way to remove the natural, understandable and quite clearly acceptable fear of change which must be in people's minds. The Bill merely produces an expensive icing on the cake. It does not produce the nourishing inside of the cake, which a graduated pension scheme would do.

All that the Bill does is provide a "recognised and important fringe benefit", as severance pay was described by the hon. Member for East Ham, North (Mr. Prentice), the Minister of State for Education and Science. Fringe benefits have two main objects. First, they are a means by which employers can provide their workpeople with improved conditions; secondly, in the point most lucidly and forcefully made by the hon. Member for Leicester, North-East, they are a counter to be used at the table of collective bargaining. The hon. Member said that he had used them himself and this was greeted with approval by hon. Members sitting near him.

Surely, there could hardly be a better counter in a wage negotiation than a wage-related, service-related severance scheme. All that we are doing today is presenting this as a new charge upon the employers, with no kind of quid pro quo, or even a copper pro quo, from the employees. If the Minister and his colleagues were serious about getting more productivity and getting rid of restrictive practices and over-manning, surely the Bill is what they should have offered to the T.U.C. and the individual trade unions as the incentive for them to get rid of their restrictive practices and allow modernisation and controversial and difficult alterations in industrial structures. This kind of Bill would have persuaded employees to accept it.

Why has the Minister, in his discussions with the trade unions—he said this in answer to a question of mine earlier today—not raised this matter? In contradistinction to his hon. Friend, he said that this kind of Bill was not suitable to be used for bargaining with employers. I really believe that it is this attitude of the Government which makes the general public inside and outside industry give up hope that they are in earnest at all in trying to tackle the questions of restrictive practices, overmanning and so on. Sincerely, I do not believe that they are prepared to get to grips with those matters.

Lastly, I turn to the most controversial aspect of the Bill, which disheartens me as one who believes in severance payments and the improvement of industrial relations. Clause 33 amends the Contracts of Employment Act so that neither under the Act nor under the Bill will it be necessary for the individual employee to keep to the contract freely undertaken with his employer. Indeed, he can break his contract quite freely in order to take part in an unofficial strike. It is a cynical act of appeasement by the Government to the trade union movement—I say this without wishing to be either offensive or over-controversial—which makes it difficult for people to understand the Minister of Technology in that he still retains his post—admittedly, he has been given leave—as General Secretary of the Transport arid General Workers' Union.

It is difficult to see how, in Cabinet discussions with the Minister of Labour, the Minister of Technology cannot have certain things at the back of his mind, not from the point of view of future gain or future employment for himself—he is obviously a highly able and employable person—but the fact that he is the General Secretary of the Transport and General Workers' Union must have an effect in his discussions and his influence on his colleagues when a Bill like this is being considered in the Cabinet.

In the Bill the Minister wishes to destroy the amount of influence which the Contracts of Employment Act has in preventing unofficial strikes. I will quote what he said on 16th April at the annual conference of the Co-operative Party at Blackpool—I nearly always agree with the right hon. Gentleman's speeches as distinct from his action—because hon. Members opposite may not read his speeches as avidly as I do. He said: One example of our current distress is the great rash of unofficial strikes that have arisen over the past few years. The damage they do to the economy can sometimes be frightening.…Today in far too many cases agreements are broken with impunity and lines of procedure commonly agreed are overthrown at a moment's notice. This is very wrong and disastrous to the standards of our country. The Minister said that a week before he destroyed the only aspect of a Bill which tried to do something about industrial disputes.

Finally, the right hon. Gentleman said: Discipline and a sense of responsibility, willingness to honour agreements entered into, are fundamental to the future of our country. It is extraordinary that the right hon. Gentleman, who is respected by so many on this side, whose work we appreciate, and whose buoyant speeches we often wished had come from our own Front Bench, should let himself down today in comparison with his speech a week or so ago. Not only is it a cynical act by an individual member of the Cabinet, but there is no doubt that if the Clause becomes part of the Bill and the Bill becomes an Act, the country will definitely consider that the Government and the Labour Party endorse and approve of unofficial strikes. There is no possible way of the Government avoiding this implication.

Many hon. Members opposite have sneered at the Contracts of Employment Act because it is weak and small. I wish that it were stronger. I wish that we had been able to do something about redundancy in it, but that was not done because we understood that the employers and the trade unions could not agree about the priority of the various measures which were to come forward. Let hon. Members think of the value which would be added to the contract of employment if the recommendations in the Bill were added and it were not amended. There really would be something of real value, something which employees in industry would like to honour.

I quote the words of the right hon. Gentleman during the Committee stage of the Contracts of Employment Bill on 5th March, 1963. There was an intervention in the speech by my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies). It is a long speech, but I will read it because it is important. The right hon. Gentleman said: It has always amused me when it has been said that somehow we must deal with unofficial strikes. If there is a pit in which the boys are having a row, and they walk out half-way through a shift, so that they are on unofficial strike, they will not sit back and think. 'Well, now, what about the continuity of employment?' If they are prepared to lose the shift's pay because they are in a paddy and are having a row with the management, of course they will not worry about continuity of employment. In the same way the management will get the union boys together and say, 'let us get back to work; no victimisation. Then my hon. Friend the Member for the Isle of Thanet intervened: Suppose that instead of losing just a week's pay they lost a half-year bonus? A situation would certainly arise in which Jack would not get George out on strike, because he would not be prepared to lose that amount. He would not do it, would he? Then the right hon. Member for South-wark said: If this Bill offered a big enough carrot, that would be a different matter. I am always prepared to look at the carrot, but there is not much of it in this Bill."—[OFFICIAL REPORT, Standing Committee D, 5th March, 1963; c. 22.] What larger carrot could there be than the contents of the Bill, the privileges and the recompense which an employee would receive if he were declared redundant? I ask the Joint Parliamentary Secretary seriously to consider amending Clause 33, to blot it out, so that we on this side, if that and possibly one or two other details went, could wholeheartedly support the Bill which we believe is basically on the right lines and basically could improve industrial relations and the full employment and full enjoyment of life of our people generally.

6.38 p.m.

Mr. Neil McBride (Swansea, East)

All of my hon. Friends warmly support the Bill. We have been interested to hear some curious distinctions in the debate. I understood the hon. Member for Aylesbury (Sir S. Summers) to say that he did not like the inclusion of domestic workers in the Bill. To me, that seems to be wrong. It is written: Well done, thou good and faithful servant. Surely there can be no higher profit to an individual than the valued personal service of someone who works well for him. These people are no longer lackeys, but should be included, like all other workers.

The right hon. Member for Grantham (Mr. Godber) criticised my right hon. Friend and said that his speech was defensive. There is nothing defensive when one is providing a bulwark of security. Indeed, one has every reason to feel the reverse. The right hon. Member for Grantham adhered closely to the brief contained in British Industry, the journal of the two employers' organisations. Since he adhered to that so strongly, I suppose that we can expect some further opposition to the Bill in Committee. His argument was repetitive in the extreme. He said that there was clear agreement between both sides of industry at that time. If so, where is the signed document to that effect? If it is extant, we can read it. If it is not, then certain conclusions may be drawn.

The right hon. Member's argument that the Bill would militate against the mobility of labour was defeated by the declaration of my right hon. Friend that employers would carefully scrutinise their labour requirement figures. To suggest that employers will do otherwise is to argue the reverse of the first axiom of business, which is to provide for future contingencies, and any businessman who does not accept that should not be in business.

I was particularly interested to hear my hon. Friend the Member for Leicester, North-East (Mr. Bradley) say that many employees do not get even a warm handshake. I left one of the greatest private shipyards in Britain to come to this House. When I left I did not get even a warm handshake; and I am sure that had I been paid off and not left of my own choosing I would not have got one, either.

I view the Bill as a great advance and I am sure that it will result in employers considering the future of their employees. To have employers doing that will be a good thing, since previously many employees—and I have particularly in mind those with long service—have suffered severely. I regard this as a good Bill. Although it has been described by some as representing a sort of brass handshake, it will provide some security for workers who would otherwise live with the fear of unemployment.

The main emphasis of the Bill is given to redundancy payments. It should be remembered that "redundancy" is a somewhat new and rather fancy word for the word "unemployed", a word which has an old and ugly meaning to many people. Those of us who have experienced unemployment know only too well what an ugly thing it is. The Bill provides some insurance against the social tragedy that is unemployment—and let us remember the social stigma that is associated with the hardship suffered by families of unemployed men. Therefore, if there are closures, reorganisations and other causes which make men unemployed, not only those men but their families will have some protection.

Do hon. Gentlemen opposite who support the Bill in its entirety agree with the hints of opposition to the Measure which are contained in this month's issue of British Industry? It is the employers' contention that the total number of redundancies in any year is small. But however many men are paid off, those who are affected suffer great tragedy. It is an unjust and socially outmoded argument to say that employers will hesitate to release marginal workers because of them being involved in making large payments. In fact, the position will be much the same as before and I believe that they will have no hesitation in unloading surplus labour.

I discount the argument that the Bill will cause trouble among workers because of jobs being available near by. There will not be trouble. I cannot accept that argument. It is clear that the Bill should contain certain exemptions, such as my right hon. Friend described. Nevertheless, 75 per cent. of the country's workers will receive a degree of protection from the Bill. Coming from a shipyard, and having lived through the conditions which prevailed in industry not long ago, I agree with my right hon. Friend that in certain industries men are not employed for long periods. I therefore value the assurances he gave about those industries.

Some time ago a survey was conducted in Wales—of which I have the honour to represent a part, Swansea, East—which disclosed that in the older and declining industries there had been a contraction of 100,000 jobs. The older men, those between 50 and 60, who lost their jobs would have benefited greatly had this Measure been in operation.

If there must be a minimum period of service before employees can qualify, then I suggest that two years is a reasonable one. I could not agree with the argument adduced by one hon. Gentleman opposite in relation to the age of 21. It is often a tragedy for a person aged 21 to be paid off. I experienced that tragedy and I assure hon. Gentlemen opposite that there should be some way to cushion the effects of being laid off at that age.

I am pleased that the Measure excludes share fishermen and other employees. My right hon. Friend's argument on this score was logical. I also endorse the provisions relating to fixed contracts of two years or more and I agree that contracts entered into after the Royal Assent has been given to the Measure should come within the provisions of the Bill. An escape Clause is inserted to the effect that an employee may forgo his rights at the expiry of the contract where no renewal provision is made in that contract. I have certain reservations about this and I urge my right hon. Friend to reconsider the matter.

I agree that disputes should be settled by the tribunals which are proposed under the Bill and I am sure that these tribunals are likely to perform a valuable service. I agree with my right hon. Friend that it might be found convenient at a later date to give them additional activities.

It was sensible for my right hon. Friend to have made a provision covering layoff time and short-time working of less than half the normal week or, where it is continuous work, for more than four weeks or an aggregate of six weeks in any 13-week period. I agree that a worker, in these circumstances, should be entitled to the payments available under the Bill. It must be agreed, although the vested interests opposed this, that industrial disputes should not effect entitlement to benefit.

It is not true to say that workers enter into strikes lightly. We live in a far different world from that which existed not many years ago. The financial commitments of workers are different. The majority of them have weekly commitments which would not let them enter a strike without giving the matter careful thought. In this context, it has been suggested that opposition to the Bill might come on the question of lost time through industrial disputes being deducted from the length of service. I assure hon. Gentlemen opposite that opposition to the Measure on that score would be wrongly placed. I am pleased that the Contracts of Employment Act, 1963, is to be amended and brought into line with modern times. Industry in this country has a wonderful record compared with the rest of the world.

It has also been suggested that the vested interests will oppose the Bill in relation to extended short-time working being equivalent to dismissal. I am sure that the hint of opposition to the Measure on this score is known to hon. Gentlemen opposite and I would like my right hon. Friend to consider this matter seriously in relation to suitable alternative employment and employment with associate companies.

It is right here to make a comparison not only between the wages, but between the conditions of service in one job and another. It is important to realise that those entitled to redundancy payments do not lose their entitlement when leaving a situation voluntarily during a notice of redundancy provided they have the employer's consent. That is an important consideration. It must also be held admissible that the employer who dismisses a man for misconduct during notice of redundancy should have to prove his case to the tribunal.

I should like my right hon. Friend to consider in paragraph 3 of Schedule I the provision applied to those of 65 years of age, because it is quite possible for anomalies to arise there. I should like him to consider the most favourable arrangements for these elderly citizens who continue to contribute mightily to our economy—paying, as they do, in one year, £250 million in Income Tax. The Ministry of Labour Gazette for June, 1964 showed there to be 186,000 people in this age range, so it is probably right to assume that in round figures there are now about 200,000 of them.

We have a great deal to be satisfied with in this Measure, and I believe that it is a major advance because it cushions against adversity. It helps when that feeling of insecurity is at its highest. The payments will be given when the man and his family need them most, and the Measure must be highly appreciated for that reason. It will help considerably in the transition from one job to another. The Bill will be appreciated by all workers, and we shall look very closely at opposition offered to it. Hon. Members opposite say that they would have done this and would have done that, but the truth is that they did nothing, and we are now doing it.

There is nothing so hard as the truth —it will out. If hon. Members opposite support this Measure they should say so clearly and unequivocally, and, if they oppose it, they should say so publicly on the Floor of this House rather than in Committee.

6.52 p.m.

Mr. Patrick Jenkin (Wanstead and Woodford)

I am tempted to follow the hon. Member for Swansea, East (Mr. McBride) by coming out unequivocally and declaring myself "yea" or "nay". The difficulty is that this is not that sort of Bill. Like the curate's egg, it is good in parts, and I am sure that the hon. Gentleman would not expect us on this side to remain mute and fail to criticise those parts that we do not regard as being as good as the rest. However, I will beware his warning that he will watch hon. Members on this side very closely: I am sure that we will appreciate his attentions.

As I understand it, the economic purpose of the Bill can be quite concisely stated, and was so stated by the Statist not long ago, as being to oil the wheels of labour mobility. That seems to be its economic purpose—to get better utilisation of manpower—and one must agree with the Minister when he said that manpower is our greatest national asset. In times of high employment it must be recognised that there is an inevitable tendency to rigidity in the labour market. Firms are tempted to hoard scarce labour, and unions are quite naturally able to exercise their very real powers to ensure the minimum of unemployment.

In addition to its economic purpose, the Bill undoubtedly has a social purpose. It recognises—it is a statutory recognition—that employees are entitled to be protected from the effects of change. That lies at the core of the Bill, but what I am not sure about, and I will come back to this point later, is whether the best method of achieving these objectives has been chosen.

My first point is that severance payments—and I could not follow the right hon. Gentleman when he said that somehow these were not severance payments, because it seems to me that that is exactly what they are—are only one aspect of the problem. There are a great many other important factors that it is right should be brought out in this debate as having a bearing on the whole question of redundancy.

I might here mention the three Ps—prevention, planning and publicity. There is prevention by anticipating labour requirements. An hon. Member opposite said that many firms are very lax in their forward planning of labour requirements and do not devote as much attention to that as they do to other forward planning aspects and to production planning. My own experience in this respect is quite to the contrary; that the labour requirement is one of the things about which one thinks furthest ahead, just to avoid being put in what is for any employer the highly uncomfortable and embarrassing position of having to lay off men.

Next, it is very important that firms should plan ahead, whether or not they anticipate redundancy, what is to happen in the event of redundancy. There must be an agreed procedure in an industry or in a firm, and I very much welcome the growing evidence there is that employers recognise this and that more and more are introducing these schemes.

The third P—publicity—is extremely important. Firms should let their employees know the position. These schemes largely lose their value if they are kept under lock and key, as it were, and people can believe that they may be made redundant—apart from the provisions of the Bill—and that the employer has no measures ready to deal with the position. Here I would like to quote from a very small publication by a major company— "Protection of Employment", the first paragraph of which seems to me to epitomise exactly the right sort of attitude. It states: This booklet could perhaps have been given the title "Redundancy" instead of "Protection of Employment", since it deals with arrangements to meet cases of redundancy, but to have done so would be to put the emphasis in the wrong place. The company's first aim is the protection of employment and it is only when that is not possible that the question of redundancy arises. It goes on to set out in detail exactly what provisions the company is making for redundancy. That seems to me to be a wholly right approach, and I hope that more companies which have these schemes will see fit to publicise them so that people know what is likely to happen.

Another requirement is advance notice. People who have adequate warning of any impending redundancy have a much longer opportunity to look for other employment. If they are to be reduced to a lower income, it gives them a chance to adjust their mode of living to take that into account—not to take on added commitments, for example, or enter into hire-purchase arrangements for buying a motor car. In this respect one read with very great interest the long report by Dr. Hilda Kahn of the severe effects of the short notice of redundancy given in the notorious case in Birmingham in 1956. It was a most valuable study which will provide a great deal of material for students of sociology for years ahead.

I give one example of long notice where redundancy was due to technological change and a process becoming quite out of date. It was related to a plant in South Wales. The firm in question gave its employees—every one of them in the factory—two years' notice of the fact that it would have to close down because it was no longer economic to operate the process in competition with other processes. There was also the other side of the coin, that the firm had to go on working for those two years until the new plant was put in. There had to be a very tricky balancing act, but it was conducted with considerable skill by those responsible. It contributed in no small measure to an atmosphere of trust between the employer and the employees. The employees, with almost grudging admiration, said, "Its tough, but the firm treats you fair." I endorse what my right hon. friend the Member for Grantham (Mr. Godber) said; very often, if approached in the right way, such a matter can materially contribute to good relations between employers and workpeople.

I do not want to get involved in the question of training and transfer payments, but I must take up one thing which was said by the hon. Member for Leigh (Mr. Boardman)—who I am sorry to see is not now present—about the lack of adaptability of miners in particular.

That is not my experience. If one goes to the Treforest Estate and other places, one finds miners doing all sorts of work there. Perhaps this does not apply to the older men nearing retirement, but young miners can do valuable work in other fields. The major obstacle is the great reluctance of some—not all—unions to accept adult entry to craft unions. There must be a greater readiness on the part of the unions to accept adults qualifying under the training schemes. I hope that the Ministry will use all its influence and power to persuade the unions to adopt this necessary approach. There is a very understandable reluctance to do this, but I think it shortsighted and not in the national interest.

My main objection to the Bill is that, although the objectives are those with which we must sympathise and wholeheartedly support, the methods chosen do not seem calculated best to carry out those objectives. There is no relation between the loss, the damage, that a person declared redundant will suffer and the compensation he is to be paid. That is the core of the case made at some length and with great force by my right hon. Friend, that this is an attempt to do two jobs. It is attempting to recognise an employer's duty to a long-service employee who has rendered faithful service while at the same time attempting to deal with the situation of hardship which inevitably arises.

This Bill has been called "a gold watch Bill". It gives the employee a sort of a gold watch treatment when he has worked for a firm for 20 or 25 years. This is quite inappropriate to the problem of hardship which arises from redundancy. I should much prefer to have seen a wage-related unemployment benefit scheme. That would seem to combine all the advantages of redundancy payment in a form which would achieve the aims of the present scheme. I should like to know from the Joint Parliamentary Secretary if—as I hope—from the review which is being carried out of the whole National Insurance system, it is proposed to have wage-related benefits in the National Insurance scheme, will the primary purpose of this Bill itself become redundant? Will either the payments in the Bill be substantially reduced or the Bill itself be repealed? There would seem very little purpose in retaining the Measure on the Statute Book if we had an effective wage-related scheme.

I quote again from the Statist: Countries with a statutory wage-related unemployment benefit scheme usually dispense with compulsory severance pay altogether. I regard these as alternatives. We have the wrong one first, but when we have had it for a few years it may be superseded by a wage-related unemployment benefit scheme, which would seem a move in the right direction. I should be grateful if we could be given some idea about how the Government are thinking about the long-term future.

My second objection has been dealt with by some of my hon. Friends. The Bill may defeat its object as employees will tend to hang on in order to get compensation when perhaps the right thing for them to do would be to transfer to a new job. This is one of the points where a wage-related unemployment benefit scheme would be infinitely preferable. If a man is not to be unemployed and if his compensation is related to the time when he is employed there is no reason for him to go on to another job. Despite what was said by the hon. Member for Swansea, East, there will be employers who imagine that they will not be able to face the lump-sum compensation and they generally would keep men on when they ought to have got rid of them earlier.

To avoid this it would be possible to make sure that a larger proportion of redundancy payment was borne by the Fund and a smaller proportion by the employer; 50 per cent. is rather high. I should prefer to see 75 per cent. paid by the Fund and a smaller proportion paid by the employer. Further, this is a measure of social benefit for employees generally and some part of the additional contribution might come from an additional 2d. per week from the employee. I should not regard that as an improper or unusual suggestion.

The Minister dealt at some length with the provisions of Clause 11, but it appeared to apply to a rather limited class of case, and in any event he made it clear in his speech that employers in so-called contracted-out eases would still have to pay the 4d. a week. I wonder whether the Bill could contain a provision to allow employers who can agree on schemes with union representatives to contract out altogether and substitute their own schemes for the national benefit? That would seem perfectly reasonable and many employers would welcome the opportunity to cement their good relations with their workpeople.

Mr. Thornton

May I correct the hon. Member on that important point? This, of course, will be considered in relation to the development of voluntary schemes, but I think the fatal feature obviously is that expanding firms are those which are able to pay for redundancies and which have the fewest redundancies. Contracting firms are usually the least profitable and have many redundancies. They are the least able to finance them. Therefore, on the basis of the voluntary scheme under contracting out on the lines suggested by the hon. Member, expanding industries with fewer redundancies would have good generous schemes but there would be nothing whatever for the contracting and less profitable industries.

Mr. Jenkin

I take the point made by the Joint Parliamentary Secretary, but I am not sure that it has the weight he suggests. If a firm is contracted out, subject to proper security, its own workers if they became redundant would not create any demand on the Fund; whereas the employees of firms which are not contracted out and which pay the same amount would create a demand on the fund. The fact is that there often is redundancy in expanding firms, because those firms have the highest rate of technological change. The example I gave was of a firm in the chemical industry, which is one of the fastest expanding industries in this country. My point is that the firms contracted out—the expanding firms—would be financing themselves. I should like to think further about what the Joint Parliamentary Secretary has said. I still feel that there should be some provision in the Bill to allow contracting out to take place. This would pay regard to the good relations that can be created between an employer and his workpeople by a sound and well-run redundancy scheme.

Mr. Charles Curran (Uxbridge)

Can my hon. Friend develop this point? Expanding firms, such as firms in the chemical industry and notably firms manufacturing motor cars, might well make bargains with their employees, as the car industry in the United States has done. The case for allowing this to happen in this country is at least as Rood as the case for allowing it to happen in America.

Mr. Jenkin

I am obliged to my hon. Friend for his support. It encourages me in the view that this is a matter which can be pursued in Committee, because it seems to me that it has undoubted advantages. A redundancy scheme is exactly the sort of fringe benefit to which the hon. Member for Leigh referred.

On the question of strikes, I go a long way with what has been said by my hon. Friends about the undesirability of amending the Contracts of Employment Act in the way that the Bill amends it. There is one point, however, which has always seemed to me to be difficult. There is a measure of unreality in believing that an employer can effectively tell a worker, perhaps 10 or 20 years after an unofficial strike, "You lost some benefit when you went on strike 10 or 20 years ago". I recognise that this is something for which no one would stand, but this does not mean that it should be ruled out altogether. The period when the man is on strike and in breach of contract is disallowed from the qualifying period for both the notice under the Contracts of Employment Act and the benefit under this Bill. I should have thought that it could be said that for a limited period thereafter under the Bill he forfeits not just the benefit earned during the period but twice or three times the benefit. There could be some expression of legislative disapproval of strikes. I agree that strikes in breach of contract are not necessarily equivalent to unofficial strikes, but some proper definition of "unofficial strikes" should not be beyond the wit of man.

I want to take up the point about pension preservation, because this is a subject with which I have been closely concerned and in which I am deeply interested. It may be within the recollection of some hon. Members present that I have a Private Member's Bill to provide for the statutory preservation of pension benefits. Unfortunately it was down for Second Reading on Friday, 26th March. In common with other more publicised Bills, it failed to come up for Second Reading on that afternoon, for reasons about which many of those who have written to me on the matter are very sore. My Bill is now down for Second Reading on 2nd July. I hope that it will go through all its stages in one day and get on the Statute Book before the end of this Session. I look forward to receiving support from those hon. Members opposite who have expressed themselves so forcefully on this subject.

The Bill makes two references to pensions entitlement. Clause 13 provides for the Minister to make reductions in the amount of redundancy payment when the employee is immediately entitled to pension benefit or is entitled to benefit, the date of the benefit being fixed by reference to the redundancy. I did not altogether agree with the hon. Member for Leicester, North-East (Mr. Bradley) on this point. This seems to me to epitomise exactly what is wrong with the method which has been chosen in the Bill to deal with hardship by the lump sum payment method. If a man is to get a pension quite soon after he becomes redundant, clearly his hardship is much less than that suffered by a man who has a long way to go before he qualifies for a pension. The Bill makes some attempt to deal with this but only where the pension becomes immediately payable, whereas many private schemes have a substantial tailing off in the last four or five years before pension entitlement age in the amount of the lump sum compensation to be paid. This is entirely right.

To return to the "gold watch" point, if the redundancy payment is regarded as compensation for loss of job and a recognition of long-service I agree that it would be wrong to reduce it by reference to a pension to which the man himself might have contributed, but that is not, or should not be, the objective of the Bill. I wholeheartedly agree with those who have said that pension benefits must be preserved. I accept the case made by the Joint Parliamentary Secretary that this is part of the wider problem. It is a wide problem affecting a very large number of people, who feel keenly about it. It epitomises the difference between the old view and the modern view of the relationship of the employer and his employee.

The old view of employment was that a pension was somehow a reward for long service; if an employee loyally served the same employer for 40 years, at the end of the day the employer would be graciously pleased to grant him a pension. In those circumstances it was entirely consistent that the pension should be payable only if the man went on serving the same employer. The modern view of a pension is that it is no more than deferred remuneration, and because successive Finance Acts have given it substantial tax benefits, it is a very attractive form of deferred remuneration. In those circumstances there can be no justification, on any grounds, for depriving the employee of his accrued pension rights, whether he is redundant or is dismissed for misconduct. He has earned the pension rights up to date. By all means give the employer a right of set-off. If he has suffered damage or loss—for instance, if the man has run off with the funds—the employer can have a claim against the benefit. However, if there is nothing of that sort, the employee is entitled to all he has earned and should be able to keep it.

I hope that in winding up the Joint Parliamentary Secretary will be able to tell us something of the deliberations of the Joint Committee which has been set up in his Ministry to examine this whole problem. I hope he can give us some indication of when we can expect proposals to come forward, because this is a very important aspect of the whole question of technological change. It does not so much affect those with which the Bill is principally concerned—those earning up to £40 a week. It affects staff generally and sometimes senior technical and managerial staff, people who should be changing their jobs fairly frequently but who find it more and more expensive to do so.

Although I welcome the broad objectives embodied by the Bill—the desire to promote mobility of labour, the desire to ease the hardships that inevitably accompany redundancy—I cannot agree that this is the best method of doing it. I would much prefer to have seen a wage-related benefit. In spite of that, I should be prepared to let the Bill go through unopposed.

7.20 p.m.

Mr. John Robertson (Paisley)

Whatever misgivings and objections hon. Members, including myself, may have about the Bill, undoubtedly it will be received very warmly by the majority of working people in the country. It is a pity in a way that we have to deal with the question of redundancy and severance pay by bringing a Measure into this House at all. It is a sad comment on the shocking inability of industry to make reasonable arrangements to deal with a very vexed problem.

I find myself in rather strange company in agreeing with a great deal that the right hon. Member for Grantham (Mr. Godber) said. I was unable to follow his long argument when he was endeavouring to equate the idea of labour mobility with wage-related benefits. I think that it would depend upon the relationship. If there were a kind of wife-husband or brother-sister relationship, that might be useful, but if it were like the graduated wage-related pension scheme that we had a year or two ago—a kind of 42nd cousin relationship—I do not think it would make much of a contribution. When hon. Members use terms like "wage-related benefits" they should be a little more precise. Does this mean a benefit equivalent to full wages? If it means that, I do not quarrel with it.

Mr. Curran

May I accept the hon. Gentleman's invitation? I will tell him what I mean by it. By a wage-related benefit I mean a benefit which is 65 to 70 per cent. of a man's wages.

Mr. Robertson

That is fair enough. At least we know what one hon. Member opposite thinks about the matter. I might be prepared to go some way with him if he would compromise and make it 90 or 95 per cent. At least let us be clear what we are speaking about.

We have been accused on many occasions of some rather ancient nineteenth-century thinking in this respect, and I share some of the apprehensions of trade unions and employers' associations about these redundancy agreements. There is some force in the argument that the redundancy agreement based on service with one employer tends to create a two-tier industrial society. There are those who, as my right hon. Friend has said, will never qualify by reason of the nature of their employment. It is the same men, in the shipbuilding and ship-repairing industry, who are unable to benefit from the provisions of the Contracts of Employment Act. It is the same people who were unable to benefit from other arrangements in industry because of the nature of their employment. We therefore tend to create a two-tier society.

This is the case in the building industry. If there is a long spell of bad weather an employer pays his workmen off. They are dismissed. How are we to cater for this situation? Is the scheme not to apply to a building trade worker because his contract has been definitely terminated? It is not sufficient for my right hon. Friend to say that he will try to get these industries to make some kind of arrangement. He has got to go a bit further than that before he can bring a sense of fairness into this kind of scheme.

There are those who have made a habit of moving around industry. When I was a young journeyman it was thought that the appropriate thing to do was to move from job to job for a year or two, or, indeed, for a number of years, to gain experience, and not to stick with one firm, to serve one's apprenticeship there and stay there all one's life. It was the custom to move around and get a bit of knowledge. I do not think that that is a bad thing. It is to the advantage of everyone concerned, to the country, the worker and the employer, because the man becomes a fully-skilled worker. This is the meaning of the word "journeyman". Anything that prevents this happening is not altogether good.

There are categories of worker who are unable, because of the qualifying period, to establish redundancy rights, yet who may never be unemployed. It is bad enough if the qualifying period is two years, and there are those who have never been in employment with the same firm for five years. It is easy to conceive of a situation where a man has worked for 40 years and yet has never been able to establish his right to redundancy payments, while another man has been unemployed on many occasions and yet has been able to receive redundancy payment.

There is something wrong here, and that is why I have resisted this kind of redundancy measure. I have made my misgivings and apprehensions known to right hon. and hon. Friends. My views have been expressed on many occasions in my own trade union. I have always resisted this kind of redundancy agreement with employers because of the possibility of making a sort of two-tier, two-nation industrial labour force.

Then again, where redundancy agreements exist, employers look rather on them as a right to declare redundancy without examining the possibility of transferring a worker to another job, of retraining workers and of sharing unemployment, if it is of short duration, by having a little short-time working. It may amount to one day off in every three weeks, which would save the workers until the bad time was over. Employers tend to see redundancy arrangements as a right to have redundancy and that is another reason why trade unionists have resisted the idea of a redundancy agreement.

This can happen. Near to my own area there is the firm of Pressed Steel, which recently declared redundant 300 workers. Three weeks later the firm was advertising for the same grade of men, and yet it refused the appeal of the trade union to share short-time working. There was a three weeks' strike, a strange situation. Therefore, we are apprehensive. In areas of high unemployment it is quite normal for people to resist redundancy and ask that there should be a sharing of the available work rather than that people should be paid off. If the wage-related unemployment benefit were pretty close to the wage they might, of course, agree to go to the employment exchange. The only difficulty in that case would be to get people to stay in the factory. In the existing situation it is natural for workers to resist redundancies and to ask that short time and the unemployment should be spread over the whole labour force.

It is perfectly true that the idea of establishing a right to redundancy pay by service with one company tends to freeze a labour force and makes it difficult to prise a man out, whether he is needed there or not. Naturally, if I could find a reasonably good job near my home I would want to establish the full rights of redundancy pay. Some other method should be found, but I do not think that it can be linked with unemployment benefit. That is not the answer. One hon. Member opposite suggested that length-of-employment related benefit might be a method, irrespective of where a man was employed. One could pay him redundancy benefit according to the length of his continuous employment. What does it matter whether that employment is with one company or another? But if we are to abolish the sense of unfairness that may arise from the schemes proposed in the Bill we must think along these lines.

Mr. Godber

The hon. Member is developing an interesting line of argument and I should like to think about it. Presumably he would agree that if the sort of thing which he has in mind were brought into being the whole contribution would have to be funded so that it would not come on the last employer, otherwise there would be a degree of unfairness.

Mr. Robertson

That is probably true. I think that that element is in the Bill and that the contribution would be spread over the whole of industry and would not fall on an individual company at a particular moment of time. That principle is, therefore, already accepted. All I say is that we should take a step further to reach what I believe should be our goal.

There are two sides to this question. There is some merit in arguing that redundancy payment based on service with one firm is very desirable, but that tends to favour certain sections of industry and certain grades of labour. We would create an under-privileged section unless something else was done. I hope, therefore, that when we discuss the Bill in Committee my right hon. Friend will be prepared to consider one or two suggestions.

Everyone agrees about the need for a flexible labour force. Those who argue for redundancy payments say that the workers are thereby encouraged to change jobs and that the blow of losing a job is softened by the payment. But there are those, and I am one of them, who would argue that redundancy payments based on service to a given concern will always tend to make workers stay put. This will be the tendency and it will cause trade unions to put up quite a struggle to see that workers remain as much as possible undisturbed. We must look at this point. It is not that I think that the question of severance pay has ever been related to labour mobility. Other measures are much more related. The provision of housing is more relevant to labour mobility than unemployment pay.

I think that I have said enough. I hate to be the only thorn among so many roses, but I feel bound to express my apprehensions on this subject. I have argued about it for many years, but, even so, with all my fears and apprehensions, I know that the majority of workers who usually spend a long time with one firm will welcome this Measure. I hope, however, that my right hon. Friend will remember that there are other people—it is true a minority—whom the Bill will not benefit. In our arguments in Committee we may be able to devise ways and means whereby all workers can be included within the scope of the Bill.

7.36 p.m.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

The Liberal Party supports the general principle of the Bill, but I have some reservations to make, some of them following on the lines of those made by the hon. Member for Paisley (Mr. John Robertson). In the debate there has been some banter between the two Front Benches as to which party had gone furthest or had attempted to do something about the problem of redundancy. I do not see why I should not throw the Liberal Party's hat into the ring and draw the attention of both Front Benches to the detailed proposals made by my party seven years ago.

While there is general approval in my party of the objects of the Bill I want to raise two objections to it. The first concerns the payment of lump sums related to length of service as a form of redundancy payment. Several hon. Members on both sides of the House have already referred to the term "brass handshake", although "copper handshake" would be more appropriate if it is to be compared with the "golden handshake" received by some directors when their companies are amalgamated and they become redundant. The comparison is bad and inaccurate also because redundancy is not necessarily the responsibility of the company concerned. It is not a blot on the employee's career for which he has to be compensated, and the payment of lump sums as outlined in the Bill can lead to unfair anomalies.

I give examples which, I hope, are correct from my reading of the Bill. If a man aged 58 had served a very long time in a company and then decided to change his job and join another company only to find himself redundant two years later, he would not qualify for any redundancy payment. This would be unfair to the employee. To take another extreme example, if a man because of his age and length of service in a firm happens to qualify for the maximum benefit under the Bill of a lump sum of £1,200 he might be successful within a few days in obtaining another post with another company at very little inconvenience to himself. In that case, he has received a lump sum of £1,200 in compensation, but in compensation for very little. I suggest that in such a case there would be unfairness to the general taxpayer in that the lump sum has been paid out of public funds, out of the levy on industry.

A much fairer system for making redundancy payments could be provided. Regarding length of service, this could affect the length of notice given by the firm—this is in part already catered for, and it is the firm's responsibility—this being followed up by a system of weekly payments based on previous pay, this being a national responsibility. A high percentage of previous pay would be called for, and it would have to be continued for a fairly long time. I suggest that such a system would produce much greater fairness to the individual, would remove some of the objections raised by the hon. Member for Paisley, and would result generally in a more satisfactory scheme.

The second objection which the Liberal Party has is to the payments being met in part by the firms and in part by the Redundancy Fund which the Minister is to set up. In our view, payments should be met wholly by the Fund. We say this for several reasons. First, undoubtedly, the legislation as at present proposed will affect the smaller firm much more seriously than the larger firm. In answering a question earlier, the Joint Parliamentary Secretary more or less underlined this point, saying that redundancies would be the responsibility of the company which was changing, the company which was contracting, not expanding. But these are the very companies which will find it difficult to meet the lump-sum payments required under the present scheme. In our view, the whole of the payments should come out of the Fund.

A second reason is that, in some cases, redundancy may occur through no fault of the firm at all, in circumstances when it could in no way be said that the firm had failed to involve itself in manpower budgeting and so on. For example, there may be a change of national policy, as there was in the recent case of the TSR2 cancellation. Such redundancies cannot be laid at the door of the companies concerned, and it seems unfair that they should be asked to make lump-sum payments out of their own funds.

The third reason why we are against payments by the firms is, in my view, very important and it harks back to something I said in my maiden speech. There is here a built-in disincentive against firms moving out of south-east England. I remember saying that one of the problems raised by the Government's acceptance of regionalism is that it does not pervade every department of Government. We come up against an example here in that firms which will be thinking of moving out will weigh the pros and cons of going, will weigh any Government attractions which may be offered, and so on, and yet they will be saddled with a disincentive in having to make redundancy payments to those of their employees who will not move with them. This is a third argument for saying that the whole payment for redundancy should be met from the Fund.

The Minister offered the contrary argument in his speech that there could be irresponsible dismissals by firms if there were no cost to them. If everything were a charge on the national Fund, they would not be over-choosey in speeding up dismissals. This is some- thing which must be avoided. In the United States, the answer has been found in the payroll tax, and the no-claim bonus which firms are able to receive. Even if we in this country are not prepared to accept a payroll tax, the no-claim bonus scheme might well be something the Ministry could consider, to see whether firms which make no claims on the Redundancy Fund could have some of their payments refunded to them.

These two objections, the anomalies and unfairnesses which can arise from lump-sum payments as proposed and the proposal that payments should come partly from the firms instead of wholly out of the Fund, are the principal objections we have to the Bill and I hope that the points which I have made will be considered further in Committee. Nevertheless, we in the Liberal Party consider that the Bill, in dealing with some of the problems of redundancy, at least fills one gap in our Welfare State system which has been there for a very long time and is, therefore, very much to be welcomed.

7.45 p.m.

Mr. John Horner (Oldbury and Halesowen)

I am very pleased that the right hon. Member for Grantham (Mr. Godber) is back in his place, because I wish to deal with his account of the stage which had been reached between both sides of industry and representatives of the previous Administration on the question of redundancy payments and wage-related benefits. When I listened to the right hon. Gentleman, I was a little confused and I tried to recall the report which I had received from the Trades Union Congress about that particular stage of the discussions. I have since refreshed my failing memory by referring to the Report of the General Council of the Trades Union Congress last year.

The right hon. Gentleman emphasised one or two aspects of the proceedings which he felt entitled him to suggest that my right hon. Friend and this Government had their priorities wrong. I hope that I shall not be accused of unfairness when I say that I thought that the right hon. Gentleman's amplification of the point which he made might even lead people to believe that the Trades Union Congress was not fully in sympathy with my right hon. Friend's action in bringing the Bill before the House now.

This is what the General Council of the Trades Union Congress told Congress in the autumn of last year. Dealing with the discussions with representatives of the previous Administration, it said: The General Council decided that the Ministry's proposals were inadequate because the categories of workers to be excluded were so wide that only a proportion of workers discharged on grounds of redundancy would benefit from them and because the amounts of payments to be made would be too small. As an alternative to the Government's proposals the General Council considered the possibility of a statutory scheme of 'service payments' to be made…to all workers who lose…their jobs. The General Council came to the conclusion however that improvements in National Insurance benefits should have priority over legislation to provide for compensation payments to redundant workers or for 'service payments' to all workers on termination of employment. The Minister of Labour was therefore informed that the Government's proposals for redundancy payments were not acceptable and the General Council reiterated their view that a substantial increase was needed in all National Insurance benefits arid that if this were achieved the benefits for sickness "— the right hon. Gentleman will recall an intervention on this subject earlier— and unemployment could include a wage-related element. The Government subsequently announced that they were not to proceed with legislation on redundancy payments until decisions had been reached on National Insurance benefits. In June the Labour Party asked for consultation with the General Council about their proposals for preparing legislation on redundancy payments.

The Report went on to describe what these proposals were—they are well known—and it concluded: This proposal is in addition to their other proposals for wage-related unemployment and sickness benefit. A report on the consultation was given to the General Council in July and the outline proposal was approved. It seemed to be necessary, even perhaps for my own benefit, to ascertain exactly what the position was in the period covered by the right hon. Member for Grantham. I feel that in bringing the Bill before the House at this stage my right hon. Friend has the full support of the Trades Union Congress and the trade union movement generally, and I congratulate him.

Mr. Godber

I listened very carefully to what the hon. Gentleman said about the point which I raised. Nothing in what he has said contradicts what I intended to convey to the House and what I thought I had conveyed. I referred specifically, first, to the debate on 14th February last year, when the Trades Union Congress objections to our redundancy proposals were spelt out in some detail. The T.U.C. said that our proposals were not sufficiently large. I accept that.

I then went on to the later consultations where the T.U.C. showed very real interest in our proposals with regard to wage-related benefits, and when I discussed with it in July the additional question of redundancy, the impression that I gained was that it was far more interested in the wage-related benefits than in reopening discussions. That may be because it felt that it would not get sufficiently adequate figures—I do not know. But I gave the general impression as I got it. I hope that that clears the matter up.

Mr. Horner

I think that the truth is that the Trades Union Congress is quite confident that the Bill will be very rapidly followed by a much wider provision of National Insurance benefits as a whole, bringing in the issue of wage-related benefits. It is not for me, at this stage, to say precisely why the General Council, a few months ago, in discussions with the previous Administration, was emphasising wage-related benefits. It may well be that at that time it had some doubts about the speed with which the Conservative Government would subsequently follow up the promises being made to the representatives of the General Council. If it had any dubiety at that stage, it is clear that the dubiety has been swept away by the return of a Labour Government.

In introducing the Bill, my right hon. Friend made no exaggerated claims on its behalf. Indeed, the Bill has been criticised from all sides. My hon. Friend the Member for Paisley (Mr. John Robertson) felt that there were serious misgivings which he ought to express, and he expressed them succinctly. We must see the Bill purely as one Measure in a whole range of Measures designed by the Government to give security to workers, to enhance the status of workers, and to remove many of the hardships which necessarily follow from working in industry which is managed in the way it is in this country.

The Bill is a great advance. I welcome the fact that for the first time the ownership of a job is recognised as the ownership of a piece of property. A job is the only thing which the great mass of our people possess, and if they lose their job, no matter how meagre the compensation under the Bill may be regarded by some of us, it is right that they should be compensated for it.

It remains a fact that 2 per cent. of our people own half the wealth of the country and the other 98 per cent. share the other half. It remains a fact that most of our people spend about one-third of their waking lives behind factory doors. I would not suggest that they always enjoy spending that time behind factory doors. There was a case the other day where in the rush to get out when the factory doors were opened at five o'clock a woman had her arm broken. There was a most interesting case for negligence brought against the employer because the doors were not opened widely enough or could not be opened quickly enough to allow egress.

However, it is in this period that people of necessity identify themselves with the work that they do. Of necessity and naturally, they begin to feel themselves part of that industry and part of that service, and it is right that at this late stage—though at this early stage in the Labour Government's administration—the loss of that position should be recognised in this fashion.

We have heard a great deal about technological and scientific change. I think that workers are beginning to get a little tired of hearing about the possibility of change. As my right hon. Friend pointed out, and as has been mentioned in speeches from the other side of the House, the loss of a job today—I am one of those who experienced the loss of a job on more than one occasion before the war—perhaps means a little more than the loss of a job in the dreadful days of the depression before the war.

Hon. Members will be aware of the level of unemployment benefit and the average earnings before the war. As one who spent many months unemployed, I do not seek to gloss over the sufferings which were endured by so many millions of people. But, as has rightly been pointed out, the sharp division between the earnings when at work today and the benefits when unemployed, even with the improved benefits which have recently been introduced, often means the total dislocation of the family's domestic budget and the upset and upheaval of its whole economy. Therefore, when there is talk about changes, meaning that they may result in workers losing their jobs, it is understandable that workers should regard such proposals with suspicion, fear and misgiving.

There was recently a report in The Times of a trade union conference. At which a delegate said: With a hungry family to feed and clothe, a man's first interest must be where his next week's wage packet is coming from—not how profitable the shipbuilding industry might become in ten years' time if only Joe Bloggs would agree happily to being declared redundant tomorrow or the next day. That is an understandable expression of a working man's fear about what redundancy may mean in terms of unemployment.

These changes will, of necessity, come about whatever we do or do not do in this House and whatever the trade union movement does or does not do, but if they can be effected with the co-operation of the workers, and with their understanding and support, the increased efficiency and the expansion of production which will result will be manifest to us all. If these changes are effected against the fear, hostility and resistance of the working people and the trade unions, I fear that we shall all be required to pay for the lack of confidence which will result from the failure to build up the necessary relations between management and workers.

As I said, a job is all that most people possess. I can understand and sympathise with the middle-aged craftsman mentioned by my hon. Friend the Member for Paisley, who spoke so movingly about his experience as a young journeyman. He represents a very large body of workpeople. I can understand and sympathise with the feelings of a craftsman who sees his craft disappear.

For a man to feel that there is no place for him, to become redundant in middle age, to lose his ability to exercise a craft after many years' experience—all this is much more than simply losing a job. For many of these men their whole lives have been enmeshed in the work they do. I know many of them. When they lose their jobs they lose chunks of their lives. It is no good saying to such a man, "You are lacking in the sense of adventure," or, "You do not understand the need for technological changes. "These are human beings we are dealing with. So, while I welcome the Bill, it must be seen to be no more than a small part of the enormous area of activity which the Government must initiate, followed by the unions and management, if these changes in industry are to be effective.

This places a special responsibility on management, and here, I think, the public enterprise industries can show an example. When talking about redundancy we should remember the significance of what has happened in the coal industry over the last 10 years, when about 200,000 jobs have been shut out through redundancy. A fantastically difficult industrial process has been carried out, in a manner which had it not been as the result of administration of a publicly-owned enterprise might have led to a very large and bitter dispute which would have poisoned industrial relations not only in the mining industry, but elsewhere.

At that same conference to which I have already referred there arose this question of consultation with the trade unions over redundancy, and the question of the forward planning of manpower needs. How right was my right hon. Friend when he spoke of the use of men, the planning of the use of men, the recognition of the fact that men are the most valuable capital an industry possesses. I would say that these are questions on which many firms have not yet brought to bear the full force of their best managerial methods. It is of the utmost necessity to ensure that redundancy is treated in a fair way, bearing in mind always that we are talking about men's livelihoods and, in many cases, about destroying a part of men's lives. Bearing this in mind we see how heavy a responsibility this places on management.

We hear talk of work methods and the institution of work study techniques, and I should like to put to the House what a trade union delegate said at that conference. He said: We are all in favour of works study techniques if they are done in the right way with proper consultation, but it is no use throwing a works efficiency bloke into a factory like a dose of syrup of figs and expect everything to be set right overnight. There was a man from the shop floor, and what he was saying was that we have to take the trade unions into our confidence and take them into management.

The Bill, I hope, will receive the overwhelming support of the House tonight, and will play its modest rôle if it is seen to be a part of a much wider transaction in which the Government are bound to give a lead, a lead which, I believe, they have begun to give. I think that that was seen emerging in the speech of my right hon. Friend when he put the Bill before us this afternoon.

8.4 p.m.

Mr. Charles Curran (Uxbridge)

I do not want to hurt the feelings of the hon. Gentleman the Member for Oldbury and Halesowen (Mr. Horner), but I must tell him that I agree emphatically with one part of his speech. I hope that in saying that I do him no harm. I agree with him emphatically that we in this country have got to recognise that the ownership of a job is to the worker here very much what the ownership of a piece of land is to a peasant. Job hunger, like land hunger, is something which Parliament and industry have to recognise.

The greatest fear in this country is fear of the sack. It is paralleled only by the fear in agricultural countries of being turned out of one's land holding. Therefore, I welcome this Bill because it recognises the existence of this widespread fear, a fact to which sufficient emphasis has not been given in the past in this country; and also because it faces us with the fact that we cannot have modernisation in this country unless we lay the ghost of the dole queues. It is simply beating the air to talk about modernisation without recognising that modernisation means and must mean that hundreds of thousands of people, perhaps millions of people, must get the sack and see their jobs disappear and put up with the disturbance, economic and emotional as well.

We must recognise this built-in fear of unemployment in the British working class. There are historical reasons for it. It is singular that in other countries there is no comparable fear There is in the German working class or the American working class no parallel to this fear of unemployment. The mass fear of the German worker is inflation. It is inflation which is the ghost in Germany. In order to lay that ghost it is possible for the Germans to take steps which in this country we have so far not attempted. In this country inflation is merely a word.

When we look at the United States we see something else again. American experience of mass unemployment was even greater than ours. Yet it has not left upon the American working class anything like the scar which it has left here.

The hon. Gentleman the Member for Oldbury and Halesowen referred, for instance, to the way in which we were able to achieve redundancy painlessly in the coal industry. He sought to argue that we achieved it because that coal industry was nationalised. We have only got to look across the Atlantic to see that redundancy on a scale much greater than anything here in our coal industry was absorbed and accepted in the United States not by the mechanism of socialism but by the mechanism of capitalism. John L. Lewis, the American miners' leader, accepted redundancy in a fashion far more enthusiastic than any British miners' leader has ever suggested. I invite the hon. Gentleman the Member for Oldbury and Halesowen not to draw too facile a conclusion.

Mr. Horner

No one in this House can have any responsibility for Mr. John L. Lewis, but will not the hon. Gentleman agree that the derelict areas of the mining industry in the United States of America are regarded in the United States as a disgrace to the whole of that society? President Johnson is doing his best after many years to repair some of the ravages of unplanned redundancy in the Appalachians.

Mr. Curran

Yes. Mr. Deputy-Speaker, you are not presiding over the House of Representatives, so I suppose you would not permit me to discuss at great length what has happened in the American coal industry. I will certainly say—

Mr. Deputy-Speaker (Dr. Horace King)

I think this argument has been carried far enough.

Mr. Curran

I can hardly pursue it without getting further off the track. I should be happy to debate the matter with the hon. Gentleman on some other occasion.

I welcome the idea behind the Bill. I believe that it will do something to help in laying the ghost of the dole queues, but I do not think that it will do very much, and I am rather surprised at the expressions of approval for it which have come from some hon. Gentlemen opposite. It seems to me—and I do not hesitate to repeat something which has been said in this debate—that if we want to lay the ghost of the dole queues it is far more important for us to use wage-related benefits. They will do far more than this Bill to end the paralysing fear of unemployment, particularly among middle-aged workers.

I wonder why the Government have been so reluctant to tackle wage-related benefits, and why they have gone for this Bill rather than for that. We can conjecture about the reasons. It may be that they fear the chain reaction which would follow if they were to raise unemployment benefits, as I have already suggested, to 65 per cent. or 70 per cent. of a man's wages.

I rather gathered from what was said by the hon. Member for Oldbury and Halesowen—and I was interested in this part of his speech, too—that the Trades Union Congress may be the main obstacle. The Government may be afraid that if they raise unemployment benefits they will be forced to put up the other social benefits as well. Rather than risk any such chain reaction, it may be that they prefer to wait for the review which the Chancellor of the Duchy of Lancaster is now undertaking. Perhaps I might be allowed to inquire in parenthesis when we may expect some results from that. I fancy that we would all like to know the lines along which his mind is working.

Mr. Deputy-Speaker

Order. The hon. Member is now going wide of the Bill. He will get no answer to that tonight.

Mr. Curran

I do not want to do any more than refer to it. It may be that the Government are afraid that if instead of doing what they are doing in the Bill they were to go for wage-related benefits, those benefits, added to family allowances, might give some men sums in excess of their normal earnings. All the same I wish that I could persuade the Government to risk it. Even if that were a consequence, it would be a small price to pay for breaking down this built-in fear of unemployment which is the great obstacle to modernisation.

We must seek to create the same climate of opinion in our working class that we find on the other side of the Atlantic. The American worker, in spite of the unemployment background to which I have referred, is far more willing than the British worker to accept change, redundancy and industrial redeployment. I shall refer a little later to the reason why that is the position there but not here.

The Bill balances itself between two possible justifications. It is not clear to me on which one the Government rest themselves. Are they arguing that the Bill will promote mobility of labour? Or are they arguing that it will promote greater equality as between the worker and the executive? It is not clear which contention is being upheld by the supporters of the Bill nor was it made clear to me in the right hon. Gentleman's speech.

The main immediate effect of the Bill will be to make employers less likely to hoard labour. As the Minister said, the Bill will become law at the end of the year. If I were to make a forecast, I would say that the Bill will induce employers to sack as many workers as they can between now and next December.

Mr. Robert Howarth (Bolton, East)

Does not the hon. Gentleman appreciate that his right hon. Friend the Member for Grantham (Mr. Godber) argued the very reverse, that the Bill would tend to make employers hoard labour?

Mr. Curran

I am making my speech. If it does not agree with what others have said, the House must decide whether to accept what I say or what somebody else says. I have come here to express my own opinion, and I pro- pose to do so without troubling very much about other people. It strikes me that the Bill is likely to have the effect to which I have just referred. I do not know whether hon. Gentlemen opposite recognise that. I think that it will speed up the tendency among employers to get rid of as much labour as they can between now and the end of the year.

I propose now to look at the Bill in more detail. I have spoken about the deadly fear of unemployment in this country, particularly among middle-aged men. It seems odd that the Bill fails to grapple with that fear. I cannot see why it does not lay much more emphasis on redundancy payments to men in middle age, instead of laying emphasis on redundancy payments throughout a man's working life. I suggest that it would not be a bad thing if the Bill were to cut out payments altogether to men under 30 and increase them sharply for men over 40. Provision is made for one and a half week's pay for every year's service between 40 and 65. Why not make it three weeks pay for men over 40, and four weeks for men over 50? After all, a man in his forties finds it hard to change his job, and it becomes increasingly harder for him with the passage of time. The Bill, disposing as it does of what is necessarily a limited amount of money, ought to concentrate the money on the people who most need it. I suggest that the age group in which it is most needed is the group over 40, and still more over 50.

If the Bill seeks to reduce the fear of unemployment, why does it take into account only the last twenty years of a man's service when reckoning his redundancy payment? After all, what we are proposing to do here is to pay a man compensation for the loss of his job. We are not giving him redundancy payment because he is hard up. We are not doing it in any sense as an act of charity. We are giving him compensation because he has lost his job.

It seems to me that in assessing the amount of compensation that he ought to get we ought to take his whole working life into account. I cannot see why we should say that only the last twenty years count. Nor can I see why we should say that there shall be no right to payment after 65. If it is worth while employing a man after 65, I cannot see why he should be penalised because he works on. I hope that whoever replies to the debate will deal in more detail than the Minister did with the reasons for these periods and these limitations.

Previous speakers on this side of the House have drawn attention to the curious impact of Clause 13. I hope that the Parliamentary Secretary will be much more forthcoming in his concluding speech than the Minister was in opening the debate. When we are considering giving a man redundancy payments I cannot see why we should take into account the question whether or not he is drawing a pension. I do not see why any strings should be tied to these redundancy payments. The question whether or not a man is getting a pension is entirely irrelevant to them. It should not be taken into account even in the limited fashion provided in Clause 13. I hope that the hon. Member will give us a clear statement about the implications of that Clause, with special reference to the position of people qualifying for job pensions.

I have said that the Bill is a good idea, in that it does something to lay the ghost of the dole queue. Having said that, however, I have said all that can be said. I am surprised at the enthusiasm which some hon. Members opposite have shown for the Bill, considering what it involves in terms of cash. The maximum benefit that anybody can obtain under it is £1,200, and in order to obtain that sum a worker must have been earning £40 a week. I should think that hon. Members opposite are aware that many people in this country earn rather less than £40 a week and will therefore qualify for rather less than £1,200.

I invite the House to consider the case of a man who is now 60 and who went to work when he was 15, having spent 45 years with one employer. There are such men in my constituency, and I dare say most other hon. Members have them. How does such a man fare under this Bill if he is declared redundant at 60? To start with, the first 25 years of his working life do not count. Let up suppose that he is earning not £40 but £16 a week. What does the Bill give him? If my arithmetic is correct he gets £480£480 after 45 years' work. That is not much more than £10 a year, or about 4s. a week.

Mr. Hamling

It will be more than he gets now.

Mr. Curran

I will deal with that interruption in a moment. Before doing so I want to say that I enjoyed the speech of the hon. Member for Swansea, East (Mr. McBride)—I am sorry that he is not here at the moment—but I was baffled to hear him lauding the Bill, especially since, from his accent, he is a Scotsman. I would have thought that a Scotsman would do the arithmetic involved and work out what the Bill does for the lower-paid worker. I have taken the example of a man earning £16 a week. Many workers earn less than that. Under the terms of the Bill they will receive a few hundred £s—no more than a few shillings per week spread over their working lives.

I cannot see that there is anything in the payment of sums of this kind to justify the enthusiasm of anybody. They are small sums. It is wrong to suppose that they will make any real difference to the fear of unemployment. They powerfully reinforce the contention made by my hon. Friends that if we mean business about laying the ghost of the dole queues we will not achieve our object by these methods; we shall be more likely to do so by wage-related benefits.

I suggest that the Bill is an attempt by the Government to do by legislation something which should have been done outside Parliament, by the trade unions. I am not criticising the Government for doing this. My own Government tried to do it, and I do not criticise them either. But both the previous Government and this Government have had to tackle this problem because the British trade unions have failed to do so. The trade unions of North America have not failed, nor have those of Germany. In fact, the trade unions of almost every other country have tackled it.

I want to quote from the Ministry of Labour Gazette for April, 1963, which gives a very interesting comprehensive survey of redundancy and the attitudes towards it in other capitalist countries. It appears from this Ministry of Labour survey that in only one other capitalist country—Italy—has the State legislated a redundancy scheme of this kind. There is no parallel for it in any other capitalist country—not in Germany, nor North America, nor anywhere else. I suggest that the inference to be drawn is plain; in these other capitalist countries the trade unions have done the job of obtaining redundancy payments for their members—a job which the British trade unions have failed to do. It is because they have failed to do their job that the Government are now asking Parliament to do it for them.

Mr. E. S. Bishop (Newark)

Surely the hon. Member is making a mistake. He should be criticising the employers. The trade unions have never had the power to make redundancy payments. The record shows that they have constantly put pressure upon employers to get them to face their responsibilities. The fact that the Government have had to bring forward this legislation is an admission of the fact that employers are not doing what they should be doing.

Mr. Curran

That is an extraordinary utterance from a member of the Labour Party. He must have been living in a private world for the last 20 years if it has not dawned on him that we have had a sellers' market in labour all that time. The trade unions have been in such a powerful bargaining position that they could have extracted whatever terms they liked. [Interruption.] Hon. Members opposite are apparently amazed. The trade unions of this country have failed to exploit the sellers' market which has existed since the war. If they had been willing to do so, if they had been wide awake, they could have done in this country what trade unions in Europe and America have done. They could have done it here by exploiting the sellers' market, like the Americans, and insisted that employers should make redundancy payments.

In this country since the war we have seen our trade union movement concern itself with two objectives. One was simply getting pay rises. It has taken hardly any interest, until recently, in fringe benefits. It has never attempted to do what unions both to the West and the East of this country have done, to extract from capitalism not simply higher wages but pensions, health schemes, re- dundancy payments, and training allowances. Unlike unions in Germany and North America, our unions have failed to use their bargaining position to get from capitalism the sort of prizes which this Bill is about.

No American trade union with a severance pay agreement would look at the payments offered in this Bill. Anyone who cares to compare what the workers in the British car industry will get under this Labour Government Bill with what has been secured by Walter Reuther for the car workers in Detroit would have no difficulty at all in deciding which technique pays the workers better; the technique of depending on politicians or the technique of using union power when negotiating with employers. The choice before the British worker to seek his objective through political activities or through his industrial organisation, the choice and the consequences of that choice, are spotlighted in this Bill. I suggest—

Mr. Gunter

The hon. Gentleman has drawn an analogy with America. What Walter Reuther has been able to do for a comparatively small section of American workers is very great, but does not the hon. Gentleman realise that the vast majority of American workers are uncovered? We are offering universal coverage.

Mr. Curran

May I refer the Minister to the statement from his own Ministry? This is what the Ministry of Labour said in its Gazette of April, 1963. It said that the A.F.L.C.I.O.—the American equivalent to the T.U.C.—estimates that 25 per cent. of current agreements provide for severance pay and that they cover 35 per cent. of the workers covered by collective agreements. One-third of the working-class, in other words, is covered by agreements—

Hon. Members

No.

Mr. Gunter rose

Mr. Deputy-Speaker

Order. Before the right hon. Gentleman intervenes, may I remind the House that interventions prolong speeches and that there are hon. Gentlemen who have been present throughout the debate who wish to take part in it.

Mr. Curran

I take the point, Mr. Deputy-Speaker. I was using the reference simply as an illustration. If the illustration is not to the liking of the Minister, let me pass on. I was using it to illustrate something which to me seems self-evident. It is that the trade unions of North America have concentrated not upon subsidising a political party but on selling the labour power of their members for the best price. Instead of subsidising Socialism they have set themselves to exploiting capitalism. Because our unions have failed to do the job which they ought to have done of exploiting capitalism and getting from the profits of capitalism the best possible bargains for their members, we are now asked to discuss this Bill.

I support the Bill, or at any rate I support the idea behind it. But the fact that it has had to be introduced by a Labour Government is a pretty good example of the futility of a Labour Government for the trade unions of this country.

8.34 p.m.

Mr. Harold Walker (Doncaster)

For the first time I have had the opportunity to read a speech by an hon. Member opposite before it was made, for the hon. Member for Uxbridge (Mr. Curran) has given the House a successful rehash of a speech which he made a little over 12 months ago on this same subject.

I am one of those hon. Members who has been present throughout the debate. My mind went back—it now seems a long time ago, although it was only six months—to the time when I was a shop steward, negotiating on these matters on behalf of redundant industrial workers. When I became a Member of Parliament I thought that I had left those times behind me, but this afternoon I could still have been in a conference room listening to those unctious voices floating across the table, full of indifference to the plight of individuals as human beings and talking only in purely mechanistic economic terms.

I was surprised to hear from such a comparatively recent newcomer to the House as the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel)—I regret that he is not now present in the Chamber—a speech reflecting some of this laisse-faire indifference to human beings.

He said that it was entirely improper to draw comparisons between the "golden handshakes" given to directors and the "brass" or "copper handshake" which is embodied in the Bill. Hon. and right hon. Members want to try telling that to some of the men on the shop floor, who would give them a very dusty answer.

One of the sources of discontent, one of the reasons that we are not getting the necessary co-operation in industry which is so vital to carrying out the technological changes which have been referred to so often in the debate, is this blatant social injustice whereby one section of the community is treated in an entirely different fashion from another.

I should like to quote from some of the figures given in the House the last time this subject was debated, when the hon. Member for Bilston (Mr. Robert Edwards) quoted facts arising out of recent mergers, as they were then, when the chairman of F. Perkins Ltd. got £30,000 in severance pay, two of the members of the board received £4,375 and £2,500 respectively, the chairman of Ely Brewery Company got £30,000, the chairman of British Aluminium got £30,000, and the deputy-chairman and managing director of British Aluminium got £58,000 between them. In that respect, I agree with the hon. Member for Uxbridge that some of the sums envisaged in the Bill are chickenfeed compared with what some of these people have received. I do not see why we should draw this distinction between these two groups of people.

I want to turn to what the right hon. Member for Grantham (Mr. Godber), had to say, in contrast to the hon. Member for Uxbridge, about the impact of the Bill on the manning of our industries and about the allegedly wasteful use of manpower which he supposes will arise from the application of the Bill. I said that I was once a shop steward. I welcome the Bill wholeheartedly because I know that it will discharge the shop stewards from one of their regular and most bitter battles—that over redundancy. I cast my mind back to the kind of battles waged in my industry—the engineering industry—about redundancy and I find that they usually took place when an employer, due to contraction of the order book or some other reason—perhaps technical change—found it necessary, in his opinion, to make workers redundant.

It was not an opinion which was regularly shared by the shop stewards. We felt that the word "redundancy" was sometimes used as a euphemism to get rid of some people who were a burden on the employers after they had given years of devoted service. We found it a sorry task, as shop stewards—in the absence of any schemes for that worker's future—when he had left that factory, to get him into employment. It is my own union's policy at present not to fight for redundancy payments, but to fight for a sharing of the available work so as to keep people in the industry.

I welcome anything which will enable stop stewards to break away from that basis of negotiation, which will enable them to say, "Poor old Bill Smith, or Joe Jones. At least he will have a bit of cash to enable him to go on for a few weeks until he has a chance of another job." In this way, much of the fight will have been taken out of industry on this issue. In that sense, I think that the Bill will lead to greater mobility of labour and greater readiness on the part of workers to accept the consequences of technical change which will make them redundant.

I welcome the remarks of my hon. Friend the Member for Oldbury and Halesowen (Mr. Horner), coming as I do from a constituency in the heart of the Yorkshire coalfield. We see there the miners from Scotland and Durham, without any difficulty and with little hardship, coming from the contracting coalfields of the North into this expanding and flourishing coalfield because of the wise policies pursued along similar lines to those embodied in the Bill. The same principle is an integral part of our railways system. Because of the policy pursued by a former Administration in relation to railway workshops, redundancy policies are applied sensibly, bearing in mind the human considerations involved, so that the workers have been freed from the railway workshops to make a contribution in other parts of the economy without much of the disturbance which has accompanied redundancy in private industry.

Mr. Curran

I agree with what the hon. Member says. Does he not agree, however, that these favourable terms to which he refers have been obtained not by legislation but by trade union action?

Mr. Walker

I agree wholeheartedly with the argument advanced by the hon. Member for Uxbridge that the trade unions have been too soft in their postwar operations, when they have operated in a seller's market and have failed to take advantage of the opportunities offered to them. But when they have taken advantage of them, they have been condemned as irresponsible. We have heard this afternoon about unofficial strikes.

I wish that the hon. Member had made his comment while his hon. Friends were talking about the retrograde withdrawal of Clause 33. Why did he not tell them about it? What would happen in the nationalised industries if the unions heeded his words—for example, in the coal industry? What would happen if they said, "If this is what we should have done, we will do it now"? Look at the tremendous power wielded by the coal miners. Would he welcome their using their industrial strength? What is he inviting? Industrial anarchy? We in the trade union movement feel that we have a sense of responsibility in these matters, and we have exercised that responsibility carefully and cautiously over many years. I contrast that with the irresponsible attitude which the hon. Member has shown in his speech tonight.

Mr. Curran

I am sure that the hon. Gentleman does not want to do me an injustice—and vice versa. I made this point about the coal industry, but I would make it about other industries, too: the unions in America have adopted the policy, first, of making capitalism flourish and making it far more profitable and then, when it becomes more profitable, of exploiting it. I see nothing wrong with that policy on that side of the Atlantic or in this country.

Mr. Walker

Nor do I. But hon. Members opposite have regularly condemned us in the past for doing what the hon. Member suggests. If he goes back over the history of the trade union movement he will find that the American trade union movement has been the most militant in history. They fought battles at the turn of the century which made our disputes in the British trade union movement look like a vicar's tea party. They have regularly pursued a policy of high wages as a basis of American technical development.

While I have listened carefully to the arguments about the economic consequences of the Bill, I regret the absence of consideration of the social effects of redundancy and the way in which some hon. Members have dealt with the serious social injustices which arise from redundancy. One of my hon. Friends spoke in guarded terms of the hardship inflicted upon a worker consequent upon redundancy. I am conscious that other hon. Members wish to take part in the debate, but may I quickly recall a recent example of redundancy with which I had to deal in my own factory?

I have in mind the cases of two employees, one who had worked for 12 years and another for 17 years in the one firm. Both had sustained industrial injuries during the course of their careers. Both were in their advanced middle years and, as a result of their age and having suffered industrial injuries, they were becoming less and less efficient in their work, bad timekeepers and so on. At the first opportunity, when the employers were pruning staff, those two men were paid off. On finding themselves outside the factory gate they discovered that because of their previous industrial injuries, combined with their advancing years, they were unable to obtain alternative employment.

Because of the small wages paid to these men over the years they were unable to accumulate the necessary savings to tide them over periods of unemployment. Throughout their working lives they had had to work from week to week. To men of this sort their work, their occupation, represents their life. Life virtually ceases when they find themselves unemployed and unable to obtain work. They rapidly go down hill and, deprived of the opportunity to keep in training, so to speak, rust and wear out.

As a former shop steward, I wholeheartedly welcome the inclusion of Clause 33. Several hon. Members opposite have spoken about unofficial strikes—although nobody has yet satisfactorily defined what an unofficial strike is—and said that they are detrimental to the economy and that they should be treated as breaches of contract. They hope that by taking such action there will be set up an instrument for eliminating them or keeping them under control.

The trouble is that hon. Gentlemen opposite entirely ignore the fact that in most industries, certainly in engineering, what they consider to be a contract is nothing of the kind. Hon. Gentlemen opposite speak about so-called agreements and contracts having been freely and voluntarily entered into, but by the peculiar nature of the negotiating machinery in some industries, those agreements have been virtually imposed upon the employees by the employers. In such circumstances they are not agreements but impositions and it is a mockery to call them either agreements or contracts. It is entirely false, therefore, to say that workers who participate in unofficial strikes in these industries are not honouring their contracts.

A most regrettable feature of this sort of thing was contained in the Contracts of Employment Act, 1963. It was held that a breach of contract would be deemed to have arisen from participation in an unofficial strike, so that workers would be deprived of their rights to benefits which depended upon continuity of service. They argued that since participation in unofficial strikes would constitute a breach of contract and, therefore, a breach of continuity of employment for that purpose, the same argument could be deemed to be valid for other benefits which were dependent on length and continuity of service—contributory pension schemes, sickness and accident schemes and other benefits.

The workers were told, in effect, "Go on strike if you wish, but bear in mind that you are placing yourselves in jeopardy in respect of your rights to all theses hard-won benefits". This was an intimidation and deprivation of the right to strike. If I challenge hon. Gentlemen opposite to say whether or not they uphold the right of the worker to strike they would, of course, say that they would do nothing to take away that right. Nevertheless, they will do everything in their power to stop him exercising that right. I therefore welcome the withdrawal of the retrograde step which was taken in the Contracts of Employment Act.

I was glad to hear the right hon. Member for Grantham say that he thought that where redundancy arose as a result of Government action the Government themselves should bear some responsibility for the redundancy pay involved. I welcome that statement because, whilst we had a great deal of publicity surrounding the redundancies arising from the cancellation of the TSR2, and whilst it has been urged that the Government should ensure that those workers are treated fairly and decently in this necessary operation, I also welcome what was said by the First Secretary of State to the Confederation of Engineering and Shipbuilding Unions, that the redundancy payments made by the firm to the redundant workers would be taken into account in determining the compensation to which the company would be entitled.

There was great publicity surrounding the thousands of workers made redundant by the cancellation of a Government contract, but in other cases there can be only a few hundred or a few score people affected. In my own constituency, for instance, because of the termination of contracts for the repair of military vehicles, 150 men have been declared redundant. Only after a long and bitter struggle are they to get severance payments which are a fraction of those provided for in the Bill, and in this case neither the Ministry of Defence nor any other Government Department accepted any responsibility at all for ensuring that those workers got fair play. Had 1,500 or 2,000 of them been involved, there would have been enough publicity to ensure that they got the decent treatment they deserved.

As one who has spent over 20 years fighting regularly on behalf of people affected by redundancy, and as one who has himself been directly involved in redundancy, I welcome this Measure, and I am sure that those whom I previously represented will also welcome it. It will take much of the heat out of the industrial battle, it will make a great contribution to the smooth introduction of the technological changes that are so vital to our economic and industrial advance, and it will enable us to bring about those changes in the pattern and location of industry that are equally vital.

8.54 p.m.

Sir Tatton Brinton (Kidderminster)

Earlier speakers seem to have gone on for a long time, so I will try to give an example of brevity by speaking for what I estimate to be the six minutes left to me.

I have had something to do with the negotiation of a redundancy agreement —a private and voluntary one, and not one squeezed from us by the trade unions. In my opinion, there are three principal elements in redundancy. The first is the loss of the job itself; the disturbance, even the emotional aspect of leaving a job one has had for a number of years, leaving one's friends there, and so on. That demands one form of compensation. Next there is the hardship element which arises from being unemployed, and with that I would bracket the not being trained easily to take up other similar employment nearby, when one's old employment is not available. The third element arises from that one, and it is the possibility of having to remove from one's place of residence, possibly going miles away to another town.

This Bill does something that needs to be done, but I believe that it does it very clumsily. It covers only one of those three principal aspects of redundancy— compensation for disturbance, for loss of the job itself—what someone has called the "gold watch" payment. It does nothing to differentiate between the man who has lost a great deal because he has lost a job that he cannot easily replace, who is out of work and who has to be retrained, and the man who drops easily into exactly the job that suits him next door. That state of affairs should be rectified.

It has been said that the Government will soon introduce wage-related unemployment benefits and that those will solve the problem, but I suggest that it will not unless we are to make universal wage-related unemployment pay so high that we will run the risk of encouraging deliberate scrimshanking. If we make wage-related unemployment benefits too high we will certainly get some of that, and there is nothing more annoying to the good worker than to see someone "getting away with it". I suggest that we ought to have a substantially higher wage-related benefit in relation to redundancy than there would normally be for unemployment pay of any other kind. I should except sickness payment. Normally the loss of a job, perhaps through misconduct, ought not to have the same wage-related benefit as I should advocate for a man who had become redundant. This Bill ought to have included both elements.

I agree that there should be a flat payment according to length of service as there is in the Bill, but on top of that there should be wage-related benefits as a measure of hardship suffered. I should add two further elements. There should be extra pay for a retraining period and also grants for those who have to move their homes any distance as a result of losing their jobs. All this should be included in any sensible redundancy scheme which is to compensate for the loss of the job after a long period of loyalty, and also to safeguard sensibly and proportionately against hardship suffered. This is what the Bill fails to provide.

The question of definition of redundancy is of vital importance. It is vitally important that the definition should be laid down for tribunals which will have to decide on what a man shall receive. The most difficult case I foresee is that of a man whose employment has come to an end and the machine on which he has been working is to be scrapped. Something different is to be installed, perhaps a much simpler machine. The man is then offered a different sort of job, perhaps at a lower rate of pay. Can he claim that he is redundant because the drop in pay is too much to expect of him?

Tribunals must be able to say that he is not redundant but is entitled to an intermediate payment because of the drop in wages. Otherwise most extraordinary things will be happening. I have heard of a case in which a man said he would not accept an alternative job but would rather be paid out as redundant under a voluntary scheme. That was done and next day he took the very job which he said he would not take, after accepting redundancy payment. There should be something between those two as the right solution.

I am very worried about the impact of that part of the payments which will fall on employers. It should not be supposed that all employers sit in gigantic boardrooms in enormous glass matchboxes. There are many small employers, particularly small farmers. Such an employer may have a man helping him for 20 years and then have to declare him redundant. He may have to pay a couple of hundred pounds as his share of redundancy payment, yet he and his family have to live on £600 or £800 a year. The State should take a much bigger share in cases where employers can establish genuine personal need and who are badly off. Otherwise the payment will fall very heavily on them.

I agree that far more of this should have been funded, but as an employer I agree that the employer should pay something to safeguard against the possibility that money which is passed into the administration and ownership of the public may be demanded as of right by individuals who have no direct responsibility to the public. Therefore, the employer must pay something. I suggest that this should be minimal in the case of the smallest employers and that it should not be impossible to write something into the Bill to safeguard their position. I see that it is 9 o'clock.

9.0 p.m.

Mr. Ronald Bell (Buckinghamshire, South)

The debate has shown that there is a general welcome for the principle of redundancy payments but many reservations on both sides of the House about the Bill, both as to its timing and as to its contents. The practice of making payments in the case of dismissal on redundancy is old. Originally, no doubt, it was confined to compensating people in managerial positions for breach of contract, as the Minister of Labour said this afternoon. Where the contract of employment is for a long period, it still is so in form. This is a fact which is recognised in Clause 14.

It has become widely known that the managers of our managerial society have often organised a very agreeable sort of security for themselves in this way which has taken some of the risk out of risk taking. In recent years there has been a wide extension of the principle into the non-managerial sphere which has been referred to this afternoon and which now, I understand, extends to cover about one-quarter of the workers.

Whether this wide proliferation of handshakes— gold, silver and bronze— is a development of human society which upon the widest and most generous considerations of principle is something which we should welcome is perhaps an open question; but for the immediate future no one can doubt that this is a development which is inevitable and, in the present context of our society, desirable.

The Bill will make universal what is at present the voluntary practice of one-quarter of industry. The extension of this practice has long been the policy of the Conservative Party. The policy of the Labour Party has been much more elusive. There was no mention of such a Bill as this in "Signposts for the Sixties", which, instead, proceeded upon the principle of wage-related benefits and the extension of voluntarily negotiated redundancy agreements. There was no mention of such a Bill as this in the Queen's Speech.

Mr. Marsh

Is the hon. Gentleman complaining that we have introduced the Bill?

Mr. Bell

I am not complaining that the Government have done it. I am just following the sequence of events which has led to the Government doing it. I was pointing out that they did not mention it in their policy statement. They did not mention it in the Queen's Speech, which referred to industrial training, to retraining, and to the Trade Disputes Bill.

This is a most suitable moment for the Minister of Labour to enter the Chamber, as I am sure he will agree, because I think that the Trade Disputes Bill must be written on his heart rather as Calais was upon the heart of a certain queen. Significantly enough, the first reference to the Bill was made not by the Minister of Labour, but by the First Secretary of State and Secretary of State for Economic Affairs in the debate on the Loyal Address.

Either that was just a characteristic obscurity on the part of the First Secretary of State, or else he had forgotten to tell the right hon. Gentleman, because when my right hon. Friend the Member for Grantham (Mr. Godber) asked the right hon. Gentleman about this two days later in the same debate the right hon. Gentleman was a little elusive and continued to talk in terms of an extension of voluntarily negotiated redundancy agreements. However, ultimately this Bill was announced.

The sequence of events here is illuminating and, I think, significant because although the Opposition do not intend to oppose the Second Reading of the Bill and although we endorse now, as we have advocated in the past, the extension of these redundancy arrangements, it was at no time our view that such arrangements should take the place of wage-related unemployment benefit. It was never the intention of my right hon. Friend to introduce such a Bill as this unless it were as part of a comprehensive system which included wage-related unemployment benefit. [Interruption.] He did not say that he had a draft Bill. I am sure he said that they had reached the stage where they were ready to draft a Bill.

Of course, it was clear as a result of the intervention and of what my right hon. Friend said in reply to it that we were concerned with wage-related unemployment benefit, and not with the Bill which we are now discussing. We think that what the Minister has done in introducing this Bill in this way is a very bad way of going about the job. All the evidence and the order in which things have happened incline me to think that the right hon. Gentleman is also of that opinion.

What has happened is this. The Government do not want to introduce wage-related benefits as a separate amendment of the National Insurance Scheme. They want it to be part of wider changes which they have not yet worked out.

Mr. Gunter

Which you ought to have done.

Mr. Bell

No, our position was quite clear.

Mr. Deputy-Speaker (Dr. Horace King)

Order. I hope that if Members on the Front Bench want to intervene they will do so in the conventional manner.

Mr. Bell

At least I was able to hear the right hon. Gentleman's intervention, and it is quite easy to deal with because we put our solution to this question clearly in our election manifesto, namely, that we would introduce as a separate operation wage-related unemployment and wage-related sickness benefits. That was our position, clear-cut, and it is in the document which I have in my hand. [Interruption.] I am glad of the admission of the fact that the right hon. Gentleman has never read it. It does not surprise me a bit.

The party opposite do not want to do things in this way. They have not worked out their full scheme, and in those circumstances our solution, as indeed my right hon. Friend's solution until he was able to introduce his Bill for wage-related benefits, was to press on with the preparation of the Bill and meanwhile to press for the extension of voluntarily-negotiated redundancy agreements. That, I believe, is what the right hon. Gentleman would have liked to do. That is why it was not in the Queen's Speech and that is why, in the debate on the Address, the right hon. Gentleman talked about that and not about this Bill—as he is forced to agree, of course. But after that, the First Secretary got at him. There is no doubt about that.

Mr. Gunter

It is the other way round.

Mr. Bell

The right hon. Gentleman does not realise it. He was probably a victim of subliminal suggestion by the First Secretary. At any rate, that is what happened. The First Secretary, of course, is trying to float an incomes policy which is leaking like a sieve. He badly needs the co-operation of the trade unions, not just in signing declarations of intent but in the solid matter of wage rates and restrictive practices.

A quite desperate operation has been going on in the last few months of pacifying, placating and cozening the trade unions in every way which the party opposite and the Government can think of devising. This, without any doubt, is how the Bill has come to be presented today. The right hon. Gentleman made it clear that this was so. He made clear on Second Reading of the Trade Disputes Bill that that was why that Bill was being introduced.

The right hon. Gentleman said in express terms that it was being introduced as part of a process of sweetening-up the trade unions in order that he might get a response from them. I do not think that he used the term "sweetening-up" but that is my summary of the sense of what he said, and he said today that that was also the purpose of this Bill. He described it as part of a wider operation and said that he hoped that it would provoke a response from those to whom it was addressed.

This was the nature of the Bill, and it is in this way that we have had imposed upon us the disadvantages which are inherent in carrying out a desirable operation back to front, which is what this Bill does. The first and obvious fault of the Bill is that compensation which, despite what has been said, can be quite high—as much as £1,200 at the maximum and not infrequently as much as £600—is to be paid for dismissal on redundancy quite regardless of whether the dismissed employee goes straight to another job which is even better in the same locality.

The payment is the same whether the man is put at a severe and long-lasting disadvantage or is lucky and actually advances his condition. [Interruption.] It would be much better if the Minister would rise and formulate his interventions, because the more he formulates them the easier it is to expose their nakedness.

The right hon. Gentleman's hon. Friend the Member for Leigh (Mr. Boardman) and two others of his hon. Friends, during his absence, attacked the Bill on just these grounds. They attacked it quite rightly, because, as my right hon. Friend the Member for Grantham and others on both sides of the House pointed out, when there is redundancy the rule of last in, first out, applies. Therefore, there is attached this disadvantage of the way in which the right hon. Gentleman has carried out this operation.

I cannot see that a payment which is fixed regardless of whether any loss is suffered is a very good example of that insurance principle about which we have heard so much in connection with the Bill. It is true that private schemes of redundancy payment tend to operate in that way, but there one has to remember two things. First, private schemes are specially negotiated and are much more flexible. Secondly, they have to operate in that way because an employer has no real way of tracing the employment history of an employee once he has left, whereas for the State that is relatively easy through the employment exchanges.

The substantial point here is that a redundancy payment scheme which was integrated with and supplemental to a wage-related unemployment benefit, which was what my right hon. Friend hoped to introduce, would be a less burdensome overhead on production than the scheme in this Bill, and it would be a far more precise instrument for neutralising hardship and making mobility painless, which we understood was the object of the Bill.

It is obvious that, by combining the two operations in a single integrated whole, one could secure the maximum result for the minimum cost. In his short intervention a few minutes ago, my hon. Friend the Member for Kidderminster (Sir T. Brinton) made an interesting suggestion which illustrated the sort of way in which one could get the best value for money by integrating the two schemes. He suggested that the level of wage-related unemployment benefit might depend upon whether it arose in respect of redundancy or not.

Now, however, we are likely to see this expensive, because isolated, scheme established first, with its £25 million raised as a direct overhead on industry, and then later, if, by some mischance, the party opposite is still in power, its refashioned insurance scheme, which will certainly be enormously expensive, will be super-added on top. It is bound to be cumulative at that stage, because, by then, there will be all sorts of vested rights and it will be extremely difficult to interweave the two operations so as to secure the most economical and valuable effect, as could be done quite easily if the two were launched together, as the party on this side had always intended.

Mr. Gunter rose—

Mr. Bell

I hope the right hon. Gentleman will make it short.

Mr. Gunter

Are we to understand that it was the intention of the party opposite to launch them both together? I understood from the right hon. Member for Grantham (Mr. Godber) that the priority was to deal with wage-related unemployment benefit first. Are we really to understand that it was the intention of right hon. and hon. Members opposite to do both together?

Mr. Bell

The point was that they should be conceived as part of an integral whole. [HON. MEMBERS: "Oh."] Yes, indeed. This is no mere gloss. It was said by my right hon. Friend in February last year.

Mr. Gunter

Oh, no.

Mr. Bell

Yes, it was, in February last year. Are we to take it that right hon. and hon. Members opposite are horrified, indignant and angry at the suggestion that, to secure the best advantage by interweaving, the two should be conceived together?

Mr. Gunter

No. We agree.

Mr. Bell

Then I shall suppose that the effect of these somewhat noisy interventions—I shall not call them ribald—is that it is all right for the right hon. Gentleman and his hon. Friends not to do it because, so they say, we did not do it. That is not a very good point even if it were valid.

As my hon. Friend the Member for Aylesbury (Sir S. Summers) pointed out, once one starts this way round, one uses the redundancy payments to do two jobs. It is fair enough that employers should carry the whole burden of the true sort of redundancy payment, the reward for disturbance in a job, if I may so call it but, when one makes the redundancy payment do the job of the wage-related benefit, as is proposed here, it is no longer fair because, when one begins to use the system to mitigate special hardship arising out of the fiction of a technological society, it is right and proper that the State should carry some part of the burden. That is just one of the miscellaneous consequences arising out of this order of doing things.

Everyone can see the point about disturbance to the way of life, the prospects and the established seniority of the old employees, the men in their forties, fifties and early sixties who were referred to so well by the hon. Member for Leigh, but how does that argument apply to a youth of 18 or 20? The right hon. Gentleman did not address himself to that. If a young man of that age is not mobile, he ought to be. Of course, he may need retraining, and for that there are the provisions made by the last Government which have been further increased by this Government. He may have to move, in which case he may need the removal grant introduced by the last Government and since increased by this Government.

Apart from that, how does the other element of disturbance apply to ones so young? Of course, the Bill applies to them only because the payment is, in fact, now intended to cover the short unemployment risk. It is being made to do the other job. As many have pointed out, it is a singularly inefficient and wasteful way of covering that risk. It is also doubtful, as I have said, whether that burden should fall on the employers.

The Minister agrees with me about this. Of course he does. He took to the unions a Bill which applied to people from the age of 25 and had a qualifying period of three years. That makes more sense. But the unions told him plainly that that was not good enough if redundancy payments were all that they were going to get in hard cash as distinct from the pie-in-the-sky of the Labour Party's rehashed insurance scheme. The Minister had to climb down. That is why we cannot—

Mr. Gunter

Will the hon. Gentleman say what authority he has for quoting that?

Mr. Bell

I thought that the right hon. Gentleman would have used the moment of intervention to deny or confirm my version of what happened.

Mr. Gunter

If we are going through the intimate discussions which took place between the British Employers' Confederation and the T.U.C., I am also in a position to quote certain elements produced by the Confederation which were just as disastrous as what the hon. Gentleman is quoting.

Mr. Bell

The right hon. Gentleman misunderstands me. I have not referred to any discussions that he had with the British Employers' Confederation. He may think that I got this from it. That would not be true. I referred to what he took to the unions; that is what was reported in the newspapers at the time, and that is where I read it. I should have thought that if it were untrue he would have taken the opportunity to deny it. But why should he? It makes it much more sensible if he took the Bill to the unions in that shape.

Mr. Gunter

I do deny it.

Mr. Bell

In that case, I thought better of the right hon. Gentleman than he deserves. But if he really began with a Bill which started at the age of 18—[Interruption.] In that case, the right hon. Gentleman is quibbling about whether it was 25 or some other age. But the fact is that the unions beat him down on age and on qualifying period.

Mr. Gunter

There is no question at all of beating down. It was a question of negotiation and consulting. It was a matter of consultation between the British Employers' Confederation and the Trades Union Congress. The hon. Gentleman is demeaning the House by referring to that discussion.

Mr. Bell

How really absurd! The right hon. Gentleman is much too thin-skinned about this. Of course he took to the unions a Bill which was in a different form—

Mr. Gunter

I did not take a Bill to the unions at all.

Mr. Bell

At any rate, the right hon. Gentleman took proposals with him. All this noise is merely to cover up the fact that he had to give way and agree to the age of 18. I would not be surprised if the unions asked for an even lower age. The right hon. Gentleman also had to come down to two years as the qualifying period.

Mr. Gunter

Really, Mr. Speaker, this is too bad.

Mr. Godber

No.

Mr. Gunter

The right hon. Member for Grantham (Mr. Godber) says, "No", but, of course, in the process of negotiation there were gives and takes from both sides. The British Employers' Confederation gave way; the T.U.C. gave way. These were the intimacies of negotiation, and that is how responsible people arrive at their conclusions. The hon. Gentleman demeans the House by his conduct.

Mr. Bell

The right hon. Gentleman is not demeaning himself, but making himself foolish. Of course, we know that negotiations take place and that both sides give way. I made the point that the right hon. Gentleman also gave way. I made the point, which I think is a perfectly valid comment, that he had to give way because he was doing this first and alone, and because it was not accompanied by wage-related benefits. If it had been, he would have been in a perfectly good position to resist the lowering of the age to 18 and the lowering of the qualifying period to two years. I cannot for the life of me see why that sort of point should not be made in a debate in this House. I thought that that was what we were here for.

Now I must hurry, because I do not want to limit the time of the Joint Parliamentary Secretary. For the same sort of reasons the Bill has such defects as these which I will go through quickly. If, for example, a man has to give up his work owing to sickness at the age, say, of 62 he, of course, gains nothing under this system, whereas under ours, with the wage-related sickness benefit, he would. If he works out his time to 65, to retirement, he gets nothing, and, of course, in the First Schedule there are shading provisions, but, in our view, they are much too jammed together at the end of the operation and all that would be extremely difficult to carry out.

Let me give an example of that. A man earning £20 a week with 20 years' seniority in between the ages, say, of 42 and 62, or 44 and 64, will be entitled to 30 weeks' redundancy pay; that is, £600. If he is made redundant at 644, virtually, he will get £600. Thereafter his £600 melts away at the rate of £20 a week till, by the time he is 65, it has disappeared altogether. From the point of view of raiding the Fund of that £600, £400 would fall to come out of the Fund, £200 out of the pocket of the employer.

There are all sorts of temptations both ways under this scheme, as has been pointed out; the temptation to the bad employer to get rid of a man before this kind of burden attaches, and the temptation to the good and loyal employer to give a man a month's holiday, which he can do by making him redundant at 64 or 64¼, then to take his £600—and collect, incidentally, tax rebate on his previous months. What he gets in redundancy payment will be free of tax, whereas after six months he would have paid tax on it. These are the sorts of difficulties which arise.

The cost will not add a big burden to big employers but it may be a considerable burden to small employers and, as my hon. Friend the Member for Kidderminster pointed out, to small farmers. These are points we may have to look at in Committee.

There is also the defect, pointed out by at least one speaker, in Clause 2(4), the question whether a man has been offered suitable alternative employment, suitable by the test of location, or pay or conditions. This is a very tricky decision. It may go one way in one district and another in another, and the trouble about it is that it is all or nothing. There is no provision for shading whatever. A man cannot get half. He either wins and gets full compensation because the offer was not suitable, or it is held it was a suitable offer and he gets nothing. That, to us, seems to be a defect which must be looked at.

Of course, the prime consideration which inclines us to criticise the Bill, though we shall not vote against it, is that it offers inducements to the wrong people. As my right hon. Friend the Member for Grantham and other Members on both sides of the House have pointed out, where there is redundancy it is, of course, the last in, the first out: they are the people who will get the least out of the Bill. That seemed to be fairly generally the view in the debate, but I gather than the Minister did not share it, because in his speech—I hope that he will not mind my saying this—he said that wage-related benefits may provide an incentive to spin out unemployment whereas a lump sum does not have that effect, and he said that wage-related unemployment benefit had the disadvantage that it was paid out at a flat rate regardless of length of service.

To many of us that has seemed the great attraction of it, as an aid to industrial mobility, because, of course, it is the last in, first out, yet although we are told that the purpose of the Bill is to promote industrial mobility that is the nature of the objection which the right hon. Gentleman brings against wage-related unemployment benefit.

I, too, deplore Clause 33. I know the practical argument against the efficacy of that Section in the Contracts of Employment Act. I know how difficult it is on the shop floor. In the emotion of the moment thoughts may not go to the Schedule of that Act. Nevertheless, it is deplorable that this sort of lead should be given by the Government at a time when it has never been so important for people to keep their industrial agreements.

With my hon. Friend the Member for Harrow, West (Mr. John Page) and others, I deplore the fact that no progress has been made with the abolition of restrictive practices to match the many gestures which have been made to the trade union movement by the Government. We do not regret the gestures which have been made. What we regret is the lack of solid progress in getting rid of restrictive practices, whether they are concerned with liner trains or anything else.

By introducing the Bill, and by other Measures which the Government have taken, the right hon. Gentleman has staked everything on pleasing the unions and getting a response from them. If he succeeds, and if the incomes policy of the First Secretary of State succeeds, as a result of these actions, the right hon. Gentleman will be entitled to say that they were justified, but if they fail, as we fear they may, we shall be entitled to say to him, "Not only are the Government to blame for failing in their main policy, but the price they have paid for doing the wrong things in the wrong way at the wrong time is an additional charge in the indictment against them".

We cannot oppose the Second Reading of the Bill, because we approve of the principle of redundancy payments, but we protest at the way in which the previous Government's initiative has been frittered away in what we believe to be a cynical attempt to appease the trade union movement and because, to quote the Financial Times, which my right hon. Friend quoted, the Government in this matter have put industrial efficiency in second place.

9.33 p.m.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Ernest Thornton)

This has been an interesting and useful debate. It has covered a complicated subject and a wide range of issues. I am at a loss after hearing the hon. Member for Buckinghamshire, South (Mr. Ronald Bell) say that he is in favour of the principle of the Bill. I thought that the bulk of his speech was directed against the principles underlying it.

It will not be possible for me to deal with all the points which have been raised, but I shall endeavour to cover the main issues. The debate has shown an encouraging degree of support for the main principle of the Bill, notwithstanding the comments of the hon. Member for Buckinghamshire, South. The scheme embodied in the Bill is designed to tackle in an enlightened and progressive way what is a human problem, the fear of redundancy, and also a question which is vital to our economic progess, the resistance to new methods and change in industry.

As has been mentioned, we are the first major industrial country to introduce a statutory scheme which embodies a central fund. A similar scheme has recently been introduced in Sweden, but it is not a statutory scheme; it is based on collective agreement between the national centres of the employers and the trade union organisations. Our overseas competitors have been ahead of us in the voluntary application of redundancy schemes, but although up to a quarter of our workers are already covered by voluntary schemes it is quite obvious that the voluntary system would not meet the need.

The hon. Member for Uxbridge (Mr. Curran) made a great point about this. I have had considerable experience in a contracting industry, and I want to point out seriously that to rely upon the voluntary principle would mean that those firms and industries which have few redundancies—because they are expanding and prosperous and can afford to pay—would have generous schemes, while the contracting and less profitable industries would have no schemes at all.

The hon. Member for Uxbridge made great play with the failure of the trade unions to do the job. Until I became Parliamentary Secretary I was a full-time trade union official in a Lancashire cotton textile union for 35 years. Twelve years ago the Lancashire cotton textile unions attempted—and have repeatedly attempted down the years—to obtain a redundancy scheme with the agreement of the Lancashire cotton textile industry. The employers refused time after time. I do not altogether blame them; they did so because it was a contracting industry and was faced with such an unpredictable degree of redundancy that they dared not face the cost involved. Our unions tried but failed to achieve such a scheme. That underlines the reason why the voluntary system will fail to meet the problem.

As for timing—the right hon. Member for Grantham (Mr. Godber), the hon. Member for Aylesbury (Sir S. Summers), the hon. Member for Harrow, West (Mr. John Page), and the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) all said that we had got our priorities wrong. There would be some justification for their attitude if they really thought that this scheme was to be introduced instead of a wage-related unemployment benefit scheme, but it is not. We very carefully considered these problems at an early stage and found that without doubt the administrative problems involved in introducing wage-related unemployment benefit meant that it could not possibly have been applied this year. If we had waited to have a redundancy scheme alongside wage-related unemployment benefit—and I agree with the hon. Member that the ideal thing would have been to introduce a generous redundancy payments scale alongside wage-related unemployment benefit—we would have had to wait. Why should we wait? It has been possible for us to introduce this Redundancy Payments Bill this year, in this Session, so that it will be in operation before the end of the year.

If we had waited so that we could have followed the priorities advocated by hon. and right hon. Members opposite there would have been nothing at all this year.

Mr. Godber

Will the hon. Member say specifically whether he is stating this proposition in relation to taking wage-related benefit and sickness pay out of the all-embracing scheme, or including them within it, when he says that we could not get it this year?

Mr. Thornton

With my right hon. Friend the Minister of Pensions and National Insurance we examined the position very thoroughly and found that for administrative reasons alone it was impossible to introduce a system of wage-related unemployment benefit this year —quite impossible. The right hon. Member gave the impression in his speech—I do not think that I misunderstood him—that when he went out of office he had a scheme carefully prepared which had been agreed. When he was questioned by my right hon. Friend the Minister of Pensions and National Insurance, all that evolved was that the party opposite had settled its priorities. After consultation hon. Members opposite had decided that wage-related unemployment benefit should come before redundancy payments. If the right hon. Gentleman had made further progress, that would have helped us along the way to introducing a scheme of wage-related unemployment benefit this year alongside redundancy payments. This was our objective, and had that been administratively possible, we would have done it.

I wish to repeat the assurance given by my right hon. Friend. The Government are urgently studying the problem of providing a system of wage-related benefits. The present Bill in no way alters our intention and determination to press on with that. The right hon. Member for Grantham, from his experience, must know the tremendous and intricate administrative problems which are involved in a scheme for wage-related unemployment and sickness benefit. We were not prepared to hold up redundancy payments which could be introduced this year. It would have been quite wrong to hold up a scheme for such payments because of inevitable delay over the administrative problems connected with a wage-related unemployment benefit scheme.

The need for better standards of redundancy payments is with us now and it is urgent. Those associated with industry know that redundancies are occurring every day. Many long-service workers are having their services terminated with no compensation at all. It has been mentioned, as the right hon. Member for Grantham himself agrees, that voluntary schemes cover only about one person in four. We shall at the earliest possible moment bring in this scheme and my right hon. Friend has said that we hope to have it in operation before the end of the year. Regarding the cost, I am a little uncertain whether right hon. and hon. Gentlemen opposite think the scheme too costly or that it is not generous enough. I have noticed that hon. Members on the Opposition back benches seem to be infinitely more generous when in opposition than when their party is in Government. I understand that the hon. Member for Buckinghamshire, South indicated that in his opinion the cost was too heavy.

We must accept that the provisions in this Bill will increase costs to industry, as will any scheme for wage-related benefits. But there is a credit side also. If the schemes result in increasing productivity, this will be the credit side to the balance sheet. The Government believe that this Bill lays down a scale of compensation fully justified on its own merits and irrespective of future changes in unemployment insurance benefits.

The purpose of wage-related benefits is to make better financial provision for a worker during a spell of unemployment, but, in our judgment, this in no way removes the case for compensation for the long-service worker. Quite apart from financial hardship during unemployment, the redundant worker may suffer a long-term loss of earnings. He will certainly lose the security which long service brings with it and he will have to face the uncertainties and anxieties attendant on losing his job—a job around which he may well have built his social, as well as his working life over the years. If we are to reconcile workers to changes which we all agree are vital to our economic progress, we shall need something over and above an adequate level of unemployment benefit. This is what the Bill sets out to ensure.

A question has been raised about the level of the surcharge and whether it is a bit too high. I understood the hon. Member for Buckinghamshire, South to say that it was pitched rather high, particularly in relation to the smaller employers. As my right hon. Friend said, we estimate that this will raise in a full year £15 million and will provide for payments of up to £25 million on the basis of 60 per cent. from the central fund and 40 per cent. from the employers concerned. The hon. Member for Aylesbury and one or two other hon. Members suggested that a bigger proportion of the payments, should come from the central fund. This was a problem which we considered very carefully. Without doubt, it will be considered again in Committee. But I believe, from a considerable experience of redundancy funds, that this is about the right balance to maintain a financial discipline and yet be fair in spreading the burden between the expanding and prosperous industries and the contracting and less prosperous industries.

What I want to make clear is that though £25 million is a substantial sum, not all that £25 million will be additional cost to industry. As has been mentioned several times, there are already voluntary schemes in operation. They were tending to increase in number, but at all too slow a rate. Therefore, whether or not we had introduced a scheme, there would have been some cost involved and the net extra cost will be considerably less to industry than the £25 million referred to.

I want to say a word about the effects on mobility of labour. This was referred to by the right hon. Member for Grantham and by other hon. Members who seemed to think that it would have the opposite effect to that which was intended. What we have to get clear on this issue is what we mean by "labour mobility" in this context. The scheme is not designed to assist mobility in the sense of encouraging workers to change their employers voluntarily, with greater readiness than they do now. Obviously, the Bill could not have that effect. But let us face the fact that there is probably already too much movement of labour of this kind, employers competing against each other for certain kinds of labour in short supply. We see the advertisements in the newspapers which have the effect of removing a bottleneck at one firm at the expense of creating a bottleneck at another. That kind of movement of labour does not help production or productivity. In fact, it probably has the opposite effect.

This scheme is designed to assist mobility in the sense that it will reduce resistance on the part of workers to change of employment which is made necessary by economic changes or by the introduction of new production methods. That is the purpose, that is the intention, and I believe that primarily that will be the effect. Therefore, rather than talking of its effect on mobility it might be better to say that the scheme will help in the redeployment of labour and help in securing the more efficient use of labour. This is its real economic justification.

Mr. David Steel

Will the hon. Member accept the point which I made about the charge on firms being a disincentive to their moving out of an area? If they are paying off employees they may be prevented from moving out to other areas. Would not the charge act as a disincentive to their moving out of areas to relieve congestion?

Mr. Thornton

On balance I do not think that it will have that effect. I believe that there would have been a real danger if we had not had the central fund. The central fund will carry 60 per cent. of the burden, which means spreading the cost over the whole of industry. I think that without that central fund the hon. Member's fears would have been fully justified.

In some cases, employers may be deterred on account of cost from declaring redundancy, but I am sure that this will not be widespread. This point was raised by the right hon. Member for Grantham and the hon. Member for Wanstead and Woodford. An employer will always weigh the alternative cost. Let us remember that the cost of compensating for redundancy to the employer concerned will be 40 per cent. but he will have to carry 100 per cent. of the cost of retaining excess labour. The latter will normally prove to be much the heavier cost.

Some employers are doubtless carrying more labour than they need. This is due partly to slack management and partly to a reluctance to face the strain on industrial relations which can be involved in a re-organisation involving a reduction of the labour force. Many unofficial strikes result from redundancies being declared. Organised short-time working, which is an inefficient use of manpower, is another example, and I believe that it results largely from a desire on the part of management not to incur the damage to industrial relations which invariably results from sacking or dismissal notices when trade has fallen off. On these issues I am sure that the scheme will have a significant effect on management, a significant effect on workers and a significant effect on trade unions. It will do a lot to create a climate of opinion in industry in which such changes become more acceptable and in consequence more practicable.

I had intended to deal with the exempted schemes but I think that I must pass on from that subject.

Mr. John Page

Will the hon. Member deal with the exempted schemes? That is what we are mostly waiting to hear.

Mr. Thornton

Where an employer is already operating a scheme for redundancy compensation, it will not normally be necessary for him to apply for exemption. Payments under his scheme will count as payment under the Bill and will attract rebate from the fund. Where an employer's scheme provides compensation more generous than the minimum required under the Bill, again there will be no need for exemption. The payments under the scheme will count as payments under the Bill. Rebates will be paid from the fund in respect of such payments, but the rebate will broadly be limited to what would have been payable had the employer made the minimum redundancy payment required by the Bill. While we do not in any respect want to discourage employers from doing better than the Bill, it would clearly not be right for the fund to subsidise such higher payment without limit.

Where exemption orders are needed —generally speaking, in cases of schemes less generous than the Bill—orders can be made only when both the unions and the employers who are party to the agreed scheme jointly apply for exemption after the Bill comes into force. This means that workers can be exempted only if their unions agree. We hope that this procedure will help particularly with the problem in industries like construction and shipbuilding.

It has been suggested that two years is too long a qualifying period, particularly in respect of the two industries to which I have referred. I agree that there are conflicting views about what is an appropriate qualifying period. Some consider two years too long while others think it too short. On balance, the two year period was, I think it fair to say, accepted in our consultations with industry as being a not unreasonable requirement. I believe, from my experience, that it is about right.

It is reasonable that an employer should not be required to make redundancy payments unless the worker concerned has become a settled member of his labour force and has given him some service. The proportion of redundant workers who will have at least two years' service will depend a good deal on the size of the redundancy. This point was made by the right hon. Member for Grantham. The bigger the proportion of a firm's labour force declared redundant, the higher the proportion of long service workers is likely to be. In most cases where a whole establishment is closed down we would estimate that the great majority of those redundant would have the necessary qualifying service. With smaller redundancies—and here the point made by the right hon. Member for Grantham has some validity—the proportion would be less because of the operation of "last in, first out".

I had intended to deal with the issues of strikes and pension offset, but these are complicated matters and, judging from my experience of our deliberations on the Trade Disputes Bill, we will have some discussion of these issues in Committee. I hope, however, that I have managed to deal with some of the main points which have been raised.

As my right hon. Friend said in opening the debate, we regard this Measure as a significant step forward in the evolution of our industrial society. I know from my long experience in the Lancashire textile industry that the economic contraction of an industry is a glib phrase, used by economists and politicians, that hides a deep human problem in terms of the disturbance and resettlement of the workers affected. I also know from experience with the Cotton Reorganisation Scheme the real benefits which could flow from an enlightened and practical scheme of compensation and the difference that this can make to the whole reaction of the workers. I therefore commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).