HC Deb 16 February 1966 vol 724 cc1383-411

7.0 p.m.

Sir K. Joseph

I beg to move Amendment No. 3, in page 2, line 39, at the end to insert: or in the case of unemployment, not earlier than the fourth day". We come to the Clause which deals with graduated benefits. One of the biggest questions the Government have had to consider is whether they should have made the benefits for unemployment and sickness the same. I am leaving widows and industrial injuries out of my argument since it seems that the principal area of potential difference is between employment and sickness.

I do not want to exaggerate the benefit which we think the Amendment might have.

This Bill claims its origin, I think, from the Report of the National Economic Development Council some four years ago which put great stress on the economic importance to the country of mobility of labour. The N.E.D.C. said that it would help mobility of labour if some of the sting of unemployment could be withdrawn. No one, of course, would pretend that we can make unemployment painless. For this purpose, the N. E.D.C. urgently suggested that unemployment pay should be related to earnings.

Both the Government of the day and the Opposition of the day—and they have now changed places—took kindly to that idea, and the Government of the day entered into discussions with the employers' organisations and the Trades Union Congress. It was then, I think, that it became plain that the T.U.C. was particularly anxious that sickness should be dealt with in the same way as unemployment. To its understanding or desire that this should be so there was added as reinforcement the fear that it might be impracticable to separate the two.

I have heard it said that if unemployment and sickness benefit were to be substantially apart, there would be an incentive to people to make their incapacity for work fall into the slot that paid them best, and pictures have been drawn of people who were really sick dragging themselves to the employment exchanges so as to qualify for unemployment benefit. We should like to know the Government's views on this issue. If it is true, and if it is administratively unavoidable, it is a pretty sufficient answer to the Amendment, but we should like to know how true it is.

It seems to me that there are here two quite separate safeguards. If men or women claim to be sick they need a doctor's certificate. If they claim to be unemployed, presumably they are in possession of their tax cards, and have to satisfy the labour exchange that they are not really masquerading. The suggestion that someone will pretend to be sick when he is really unemployed, if the sickness benefit is the more advantageous, assumes that the doctor will play a deceitful part in the operation. The suggestion that a man will pretend to be unemployed when he is sick, if the unemployment benefit is the more advantageous, assumes that the employment exchange will pay him although he is not in possession of his cards.

It may well be that I am over-simplifying, but I must point out that there are in Europe at least two major countries in which unemployment and sickness benefit do not necessarily march together. I have not gone deeply into this—I have only the one sheet of paper in front of me. In France, the definition of both unemployment and sickness benefit is so complicated—with different components coming from different sources, and the amount varying in different regions—that the only thing it is possible to say with any certainty is that the two are not identical. In Germany, paradoxically to me, it is the sickness benefit which is usually higher than the unemployment benefit. That seems rather odd to me, but there, again, the two are not identical. I therefore do not think that the right hon. Lady can claim that all countries find the same difficulty and so have to make the benefits identical.

All this would be a waste of time if there were not some reason for thinking, as we have reason for thinking, that there is economic justification for making unemployment pay slightly more advantageous. We feel that the community stands to benefit if the man or woman who is unemployed can straight away turn round and seek another job without having to worry himself or herself sick about maintaining the standard of living of the home for the immediate one or two weeks before the graduated benefits payable under the Bill begin. That is why we seek to give the Government a chance to give us their thinking and, if necessary, to undertake to consider this provision again.

We think that there would be an advantage in letting the benefit for unemployment start without the long 12-day waiting period. The right hon. Lady could say that in the case of unemployment there are some people who might be encouraged by that to malinger. That may be so—I do not know. I have never been one who believed that malingering should be over-stressed. There is an element of malingering, and I think that over-generous treatment could encourage it, but I also think that we are wrong to put it as our first consideration. But it is true that if we make the graduated unemployment benefit too easily available, it might encourage some undesirable practices.

The right hon. Lady will no doubt give us her judgment on that, but what we would like her to consider, first and foremost is this. Bearing in mind the N.E.D.C. 's first recommendation that started the Bill on its Government life, does she not think that it would take more of the sting out of unemployment than the Bill provides if the graduated unemployment benefit started earlier than the graduated sickness benefit?

I take it that the Minister will not object to my leaving out of my arguments the provisions for industrial injuries and widowhood. These are a quite separate consideration, and we think that the 12-day waiting period is not unreasonable. I hope that the right hon. Lady will give us a fairly full answer, and we should like to have a chance to consider it. We are not absolutely confident that our Amendment would give the right balance of advantage, but we would like to hear the right hon. Lady's views—and, of course, the views of other hon. Members.

Mr. Heffer

I said on Second Reading that on certain questions I found myself in agreement with the right hon. Member for Leeds, North-East (Sir K. Joseph). In the present instance, I am not entirely in agreement with him, but I think that the question requires the closest examination. As someone who in the past has always considered that the three waiting days, as they are known in industry, have been an imposition, I feel that this present provision will be considered an even greater imposition by industrial workers. I also fear that it is not likely to effect the greater mobility of labour which the Measure is designed to encourage but rather that it could have the opposite effect.

Strange though it may seem, I think that the malingering element could develop as a result of the 13 waiting days for the extra benefit. If a man receives the extra benefit almost from the word "Go", those people who want to find employment quickly will find it in any case, and it will be an added incentive for them to move around to find that employment; or, if they are offered employment in other places, they will have sufficient money to make the move.

The malingerer could say, "I will keep out of employment for at least 13 days in order to receive the additional benefits at the end of that time". We must take that factor into consideration. I do not suggest that malingering is a usual practice. My experience has been that when a working man becomes unemployed he wants to find other employment as soon as possible, because there is nothing more undignified than being unemployed. I know this from personal experience. I ask that this matter should be looked at again.

Where I differ from the right hon. Member—I suppose that I am guilty for not putting down an Amendment in this direction—is that I think there has always been a very powerful case for the sickness and unemployment benefits to be equal. I have always argued this. I understand the view which the T.U.C. takes of this matter. I ask my right hon. Friend, so far as concerns the 13 waiting days, what discussion, if any, has taken place with the T.U.C. on this aspect of the Bill? Perhaps she will develop that point in her reply.

This is a very important matter. I hope that the Government will have another look at it and possibly come forward later with an Amendment if they are not prepared to accept the Amendment before us now.

Mr. Dean

I am glad that the hon. Member for Liverpool, Walton (Mr. Heffer) raised those extremely interesting points. I wish to refer to some other matters.

The right hon. Lady, in her Second Reading speech, when mentioning the 12 waiting days, said, as reported in column 40 of the OFFICIAL REPORT for that day: This waiting time is necessary to ensure that the supplement does not have to be calculated for the very large number of very short-term spells of incapacity or unemployment."—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 40.] This is our old friend the administrative argument, which we are getting used to in these debates, coming out again.

I ask the Joint Parliamentary Secretary whether we can be sure that the needs are not different in these two cases. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) and the hon. Member for Walton referred to this. It seems that there is a very strong case for saying that any additional benefit of this kind should start earlier for unemployment than for sickness. I believe that to be so for two main reasons. In a very large number of cases a sick employee would be covered anyway for a short period. He may not be covered in every case by a formal agreement, but, in practice, the large bulk of such employees would be covered for a short period.

That surely is not so in the case of unemployment. In the bulk of the cases where a man becomes unemployed, unless he happens to be among the small number of cases which would have some benefit under the new redundancy scheme, the chances are that there would be nothing or very little coming from the employer. I leave aside the question of tax relief because that complicates the matter. For these two reasons there is a very strong case for saying that benefit should start earlier for unemployment than for sickness.

7.15 p.m.

The argument put forward by my right hon. Friend the Member for Leeds. North-East about mobility of labour and assisting someone who is unemployed to get a new job as quickly as possible is very relevant. We are dealing with someone who no longer has a job. In the case of sickness we are dealing with an entirely separate problem. The employer is still present, but the man is incapable of doing his job at that time. When a man is looking for a new job the benefit should start earlier than when he is sick.

It may well be that the administrative difficulties are too great and that the possibilities of people changing from one payment to another in order to try to get whatever will benefit them most are real. There is surely an effective measure of control to deal with that problem. A man can draw sickness benefit only if a doctor has issued a medical certificate. He can obtain unemployment benefit only if he is available and reporting regularly for work. I cannot see that it should be impossible to overcome this problem if the principle is believed to be established.

Mr. Curran

I, also, ask the right hon. Lady to explain in some detail the reason for providing this particular period. I do not want to repeat the arguments about the relation between the period for sickness benefit and the period for unemployment benefit. I wish to put a rather different point.

I invite the right hon. Lady to look at the facts about the contemporary labour market and to agree that there are two, among others, which strike the eye. The first is that the wage level is far higher than it used to be. That is something we all welcome. Therefore, the economic shock when a man loses his job is a very serious one; it is immediate and severe. That seems to be a very powerful reason for seeking to mitigate the shock as much as possible.

We may like it or may not, but it is not the case that all people with high wages practise the virtues of thrift, are frugal, far-sighted and save money. I do not criticise them for that; people's temperaments vary. Anyone familiar with the labour market—and I reckon to have some familiarity with the London labour market—knows very well that it contains all sorts of people. Some of them are frugal, farsighted and abstain from consumption so that they can save, but some do not. We shall not alter them by preaching at them, exhorting and putting pressure on them. This is how people are and we must accept it.

If we want to promote mobility of labour, which is the primary purpose here, we have to recognise that it will not be promoted if, when they lose their jobs, people find themselves in immediate economic difficulties. They are not likely to be adventurous, footloose, or mobile if they have suffered an economic shock. They are likely to stop where they are and to take the unemployment benefit which is available. If, however, they can draw unemployment benefit earlier they will be more likely to be willing to seek other jobs in other parts of the country.

I cannot be too dogmatic about this, but I suppose that the Ministry and the right hon. Lady had their reasons for fixing on this period. Before we accept the Clause we should know exactly what those reasons are, and on what arguments this period was based, to see whether it will observe the realities of the contemporary labour market.

Captain W. Elliot

On Second Reading, the right hon. Lady said this: It will be payable for up to six months of unemployment or sickness after the first 12 days. This waiting time is necessary to ensure that the supplement does not have to be calculated for the very large number of very short spells of incapacity, or unemployment."—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 40.] I recognise the force of that. If the time for payment were reduced from the thirteenth to the fourth day, there would be a vast number of claimants—for instance, in the case of an influenza epidemic. Was the reason for fixing it at the thirteenth day only an administrative one? I recognise that, in addition to producing a vast number of claims, there would be a great increase in expense if the time for payment was reduced.

I have studied various schemes which might encourage mobility of labour, which, as we know, is one of the objects of the Bill. I remember discussing a scheme at the London School of Economics by which a large sum of money, almost up to full earnings, was to be paid immediately unemployment started, with a tapering off in future months to encourage the man to look for another job. Has such a scheme been considered in the Ministry?

Miss Herbison

We have had a very good debate on this Amendment. The loss of a job through either unemployment or sickness is a matter of great concern. In April, 1963, the N.E.D.C. recommended that there should be earnings-related unemployment benefit. From the time that discussions began between the then Minister, the T.U.C. and what is now the Confederation of British Industry, it was accepted that earnings-related sickness benefit was also a desirable object.

I have been asked what would be the administrative difficulties in the way of accepting the Amendment. The hon. and gallant Member for Carshalton (Captain W. Elliot) asked what would be the cost if the Amendment were accepted. Both these considerations had to be taken into account when we examined the whole cost of the scheme. What would be just, what would be administratively possible, and what would be financially possible—all these considerations have been taken into account.

The Government have been asked whether statements about the number of sick men who might try to get unemployment benefit and vice versa have not been exaggerated. However, we have the experience of the pre-1948 period when those of my hon. Friends who lived in areas of high unemployment saw for themselves what happened when unemployment benefit was better than sickness benefit. The Ministry has been able to confirm the impressions which I gained over a long period from my hon. Friends.

The line between sickness and unemployment is not always clear. Under the Amendment, a man who got earnings-related supplement for the fourth day of unemployment and who, before the twelfth day became sick, would go over to a flat rate of sickness benefit and lose his supplement. That is one case which I do not think anyone would want to happen under the new scheme.

Workers receive notice—sometimes a week, sometimes a fortnight, sometimes a month—that their job is to end. Assume that a man under notice becomes sick a few days before the expiry of the notice. Instead of getting the earnings-related unemployment benefit after four days, he would get the flat-rate sickness benefit. These are matters of administration. They are also matters of justice as between someone who has lost his job through unemployment and someone who is out of work because he is sick. Although this question was given priority in the National Plan, we must very carefully weigh the social considerations.

If the Amendment were accepted, much would depend on the order in which the sickness or unemployment occurred. A man with 12 days' sickness followed by 12 days' unemployment would receive only a 12-day supplement because he was sick first. A man with 12 days' unemployment followed by 12 days' sickness would receive 21 days' earnings-related benefit. It seemed to the Government, from their examination, that these were injustices which should not be accepted.

It may be argued that these difficulties are surmountable, but if we tried to mitigate the worst of these difficulties we should complicate the scheme to a much greater extent and we should puzzle claimants. The sick and the unemployed do not fall into neat categories. People who are unemployed can fall sick. People under notice can fall sick. These are almost everyday occurrences. The examples I have given are not exceptional. This was why the Government had to face these facts.

The hon. Member for Uxbridge (Mr. Curran) asked whether one benefit could be paid more quickly administratively. Unemployment benefit could be paid more quickly from an administrative point of view But after examining all the points, we feel that this would not be the right thing to do.

7.30 p.m.

The right hon. Member for Leeds, North-East (Sir K. Joseph) referred to schemes in other countries. I do not know how much he has examined those schemes, and I say this in the most kindly way. I have been interested in foreign schemes for a long time and I find that the more one examines them the more one concludes that one knows less and less about them. It is almost impossible to find valid comparisons between those schemes and our own.

Earnings-related supplements were originally thought of by many as a means of encouraging the mobility of labour, but I believe that what I have said has shown an overriding case for uniformity. There are, however, other important considerations which would justify the Committee in rejecting the Amendment, which, in any case, I understand has been tabled only for probing purposes.

The hon. Member for Somerset, North (Mr. Dean) and the hon. and gallant Member for Carshalton and others have referred to what I said on Second Reading. It is true that about 50 per cent. of short spells of incapacity, for whatever reason, last less than two weeks. I am aware of the point made by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) but on the basis of figures which have been given on previous occasions I do not think that we can tailor a scheme just to catch malingerers.

I said at the beginning that this was not over-ridingly a matter of administration. There was also the matter of expense and it did not seem to us justifiable to incur substantial expense for the early days of sickness and unemployment over and above the flat-rate benefit that is paid. I do not think that it is necessary to accept the Amendment or something like it to achieve the objective of mobility of labour, which I realise is important.

The right hon. Member for Leeds, North-East rightly emphasised that what worries a man is not the prospect of a few days of unemployment but of several weeks or even months, with its related financial anxiety. Since the earnings-related supplements will be paid after 12 days from the thirteenth day we are going a long way to eradicate this financial anxiety, especially for the family man who has continuing commitments whether he is sick or unemployed. Therefore, I think that the provisions of the Bill are a contribution towards the achievement of mobility of labour.

There are payments, which will be received immediately after a person is unemployed, which will help to supplement the flat-rate benefit. An hon. Member has mentioned the tax rebate, which can be considerable particularly for the man who receives very high earnings and who will benefit most from this earnings-related Measure. Many of these people will receive the tax rebate in that early period. There may also be payment in lieu of holiday entitlement. At the moment, holiday payments have to be taken into account when a man seeks unemployment benefit, but we will be submitting regulations to provide that in future a man will still be able to have his holiday payment and his unemployment benefit. Where unemployment has been due to redundancy, a man will be entitled to receive his lump-sum payment in that early period.

All these payments, of course, will not apply to every man. One or other will apply to a great many, but we must face the fact that there may be some who will not have any of these payments at all. Another, fourth item which a man may receive during this early period is one week's pay when he first becomes unemployed.

There are other administrative implications. I shall not deal with them now unless the Committee wants me to go into them in detail. I hope that I have said enough to persuade the Opposition not to press the Amendment. I have been asked about the cost. If the Amendment were accepted it would cost an extra £6 million a year, according to a report from the Government Actuary in which he takes into account a level of 2 per cent. unemployment. I hope, therefore, that the Opposition will be willing to withdraw the Amendment.

Mr. Heffer

My right hon. Friend has brought out some important points, but she has not overcome the point that I made. I was not arguing that there should be any difference in payment of benefit for sickness and for unemployment. I agreed that the case for uniformity of payment was absolutely correct and that there could be no argument about it, but the point is that the workers who are mainly affected by short-term unemployment, possibly over a period of six months or so, are those who are employed in casual industries such as the construction industry. When we talk in terms of redundancy payments we should remember that it is these very workers who will not receive the type of redundancy payment that workers in a more stable industry would receive after long service. A man in another industry may work for perhaps 10 or 15 years and thus receive a reasonable and substantial sum in redundancy payment. However, a worker in a casual type industry will not get such a payment and will benefit most from the wage-related benefits.

Whilst I accept that there must be complete uniformity and that, possibly, payment on the fourth day, for example, is not feasible in view of the economic situation and the expense involved, I still think that the 12-day period is too long, and I hope that my right hon. Friend will look at it again. Could not she consider a period of seven days?

For the first week of unemployment, the worker will have a week's wages to cover him. Thereafter, for three full days no money will come in at all. Then, of course, he will get the normal basic benefit. But it is at the end of the first week of unemployment that he really begins to feel the pinch. If we are to get greater mobility and social justice as well—which is an essential principle here—the new benefit should come at that stage.

I urge my right hon. Friend to look at this again to see whether the date cannot be brought a little further forward. I accept all her arguments, which have been most convincing, but, nevertheless, some workers will be particularly affected by casual employment and it is these we should consider.

Mr. Kenneth Lewis

I must apologise to the Committee. I have been unable to listen to the whole debate because I had a meeting outside. But I heard what the Minister of Pensions and National Insurance said. It was the most reasonable speech that she has so far made in this Committee stage. Obviously, the Division has helped to bring her back to a rather better mood.

Miss Herbison

We won it.

Mr. Lewis

I hope that the right hon. Lady's new mood will last for the rest of the evening. She made out a reasonably good case for maintaining this provision and, as we have indicated, this is only probing Amendment. On the other hand, the hon. Member for Liverpool, Walton (Mr. Heffer) suggested that the 12-day period should be looked at again. It should certainly be borne in mind in the review of the social services, about which we have heard so much.

I did not like two points that the right hon. Lady made. I did not think it really fair when she said that a worker would have a week's pay "lying on". In fact, he would not have received that week's pay immediately he started his job, so surely it is not something that should be taken into account as against the benefit he is getting for unemployment.

Nor could I entirely accept the right hon. Lady's argument on Income Tax. This is the worker's money, not the Government's. It is not money that should be used as an argument against giving the worker wage-related unemployment or sickness benefit. It is money that has been taken from him by the Government in taxation and which is being returned to him with the drop in his income. I discount both these arguments, but the rest I accept. I hope that, in the longer term, the right hon. Lady will look at the question of whether the period should not be rather less than 12 days.

7.45 p.m.

Miss Herbison

My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) is worried about the existence of the 12-day period before the supplement will be paid. When he spoke previously he asked what consultations we had had on this with the T.U.C. I can assure him that on this and other matters the T.U.C. was consulted.

It has been suggested that I should think about this again, but if it had been possible to bring in the payment earlier I assure the Committee that we would have done so. But for the reasons I have given, and some administrative reasons with which I did not deal, it is impossible, in this interim scheme, if we are to get it "off the ground", to pay the supplement before the end of the 12 days. Of course, in discussing this with the T.U.C. we made it clear that this is an interim scheme and that this aspect will be fully examined in the formulation of the full scheme that is to come. I give that guarantee.

The hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) must have picked up wrongly one or two points that I made or have taken them out of context. I was actually taking up the point made by the right hon. Member for Leeds, North-East (Sir K. Joseph) about the financial worry of unemployment. I was merely trying to state the facts and not to discuss where the money came from. What would a man have? First, he would have his unemployment benefit. On top of that, he might have an Income Tax rebate. He might have—indeed, would be likely to do so—a week's wage available during the first week of unemployment. That is all I said. I merely pointed out that these were sources of income that an unemployed worker might have, and I was also careful to point out that some might not have a certain source of income at all. I hope that, with this explanation, we shall be able to pass on.

Sir K. Joseph

We thank the right hon. Lady for her courteous and helpful speech. If we were convinced that the Amendment was thoroughly justified on the grounds either of social justice or of mobility of labour, we would have attacked her administrative difficulties. They sounded impressive in the telling, but added up to a number of rather minimal problems.

Miss Herbison

I really did not deal thoroughly with the administrative difficulties. I asked the Committee if it wished me to deal with them but I thought that the few points I had made were sufficient.

Sir K. Joseph

Behind the first rank of administrative difficulties, the right hon. Lady threatened us with many more. The point she made about a person suffering a metamorphosis during the first 12 days or becoming sick during the period of notice was rather minimal. Were we convinced that the change proposed in our Amendment were right we would want to spend more time on these difficulties and take more interest in the other administrative problem.

However, the right hon. Lady made one or two points which have convinced us that this Amendment is not an urgent matter, either for social fairness or for mobility. When she says that half these spells of unemployment are for less than two weeks and lists the number of first-line reserves, as it were, that the unemployed man has for the first 12 days, she makes us realise that the greater cost which would have to be borne by individuals and by industry would not be justified. We are grateful to her for giving us fairly full information and I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Sir K. Joseph

There are many matters arising on the Clause on which I should like some guidance from the Minister. The hon. Member for Liverpool, Walton (Mr. Heffer) appears to be about to leave the Chamber, but before he does so I ought to tell him that one of the points I wish to make concerns his own comments about subsection (5, a) which he made on Second Reading. He will remember that he said that taking 1/50th of the reckonable year would be unfair to those people who had periods of unemployment and whose average weekly earnings were, therefore, relatively low. He proposed to his right hon. Friend that the best four months of the reckonable year should be the period to be taken into account.

I wonder whether the Government have considered that. I know that there has been much debate about the right yardstick, the right criterion, but there is a simplicity in the Bill's present proposals which has its advantages. But the whole of the Clause is weighted against the low paid man. I accept that there are many problems about helping the low-paid man without creating undesirable disincentives, but where there is an opportunity to help him, I would have thought that the Government would have seized it, and we would like to hear the Government's reaction to the hon. Gentleman's proposition. There may be all sorts of other ways in which to deal with this, but if the Parliamentary Secretary will tell us something about the Government's attitude to the low-paid man wherever he is mentioned in the Clause that would be helpful. I am grateful to the hon. Member for Walton for staying. That is the only reference I have to make to his Second Reading speech.

In subsection (4,b) we come up against the wretched 85 per cent. rule which, as the Government recognise, hits the low paid man and is not much of a burden on the above-average wage earner. Subsection (8,b) provides for regulations to allow subsection (4,b) to be varied. The interesting thing is that the 85 per cent. rule can be varied for the purposes of the application of this section to any particular case or class of case. Do the Government have in mind that where there is an industry or a section of an industry with a particular preponderance of low earners, they should consider altering this additional earnings stop? If this is not their intention, what on earth is the point of subsection (8,b) and why is it so drawn as to give the Government power to vary, presumably the earnings stop, in its application to any particular case or class of case? Surely a particular case cannot mean any particular individual. What does it mean? Does it mean M workers, or M workers in Scotland, or M workers in Aberdeen? How particular is this case and what is a class of case? Does that mean all M workers earning less than so-and-so? Perhaps the Parliamentary Secretary will explain the outcome of subsection (4,b) and subsection (8,b) when taken together. I may have misunderstood to what subsection (8,b) applies.

I took those matters first because the hon. Member for Walton was then in the Chamber, but there are others to make. I presume that the Government are well aware and do not particularly regret that the result of subsection (4, a) is to redistribute against the man or woman earning more than £30 a week. The man or woman earning more than £30 a week is once again penalised by the Bill. The minds of Government Members may go to the entrepreneurial class which I believe to be the most important class for the prosperity of the country, but perhaps I can appeal to hon. Members opposite by mentioning that this group also contains the technicians, the technologists and the managers on whom even they reckon that our prosperity depends.

We would like the hon. Gentleman to tell us how the Government can possibly use the Clause or vary the Clause later to help the low paid earner. I have drawn attention to subsection (5, a). I hope that the Government will give us an undertaking to consider again before Report whether there is any simple variation of the l/50th rule which will help the lower-paid man, particularly the man whosé job is fairly precarious and whose work is constantly interrupted. The interruptions of his work automatically reduce the benefits which he gets from the Bill and we hope that the Minister will give us more information on this subject.

I must confess that there are other subsections which I do not understand. Will the hon. Gentleman explain what subsection (7) and subsection (8, a) mean? Will he say why it is necessary in subsection (8,b) to provide for a variation in the relevant Income Tax year? After all, the reckonable year is clearly defined elsewhere in the Bill as being the year running to the previous 5th April and yet suddenly we find in subsection (8, e) that there is power to change the reckonable year. Can the hon. Gentleman tell us whether the requirement in subsection (8, g) will bear in mind the introduction of the mechanisation of accounting systems and the use of the electronic systems? I am sure that he will, for the Ministry itself is a pioneer in this respect.

I am sorry that those questions are numerous, but this is a long and important Clause. I conclude by saying that we would like to hear whether there is anything the hon. Gentleman can tell us not only about the low paid man, but the man who is more than once dependent on the Bill in a relatively short time. How often can a man be unemployed and claim under the Bill? Heaven knows that we do not want to predict a situation in which there is a rapid turnover of jobs, but I do not know whether in the Clause or elsewhere there is a definition of how long must be served before a man is entitled again. Perhaps the hon. Gentleman will give us what help he can with those questions.

Mr. Pentland

The right hon. Member for Leeds, North-East (Sir K. Joseph) has raised a number of complicated and technical questions, and I will do my best to deal with them as briefly as possible. Obviously, if I had to develop many of them we would be here for a very long time.

Subsection (8,b) gives the Minister power by regulation to modify the operation of the benefits ceiling in any particular case or class of case. This power is not intended to enable the Minister to modify the ceiling in its application to all cases—the words quoted would preclude this—but rather to vary the benefit ceiling in individual types of case.

8.0 p.m.

It is intended to use this power in a most generous way. For example, where the rate of sickness benefit payments is reduced because of free in-patient treatment in hospital the ceiling will be applied only after hospital deductions have been made. It may also be needed in cases where there is a deficient contribution record.

We have said repeatedly that the problem of the low-paid workers gives us concern. There are other ways in which we would eventually hope to deal with this problem, and I am sure that the trade unions are just as conscious of the problem as anyone, including the employers. In subsection (4) the amount payable by way of supplement in any particular case is whichever is the lower of the amounts arrived at by applying the formulae set out. Thus, for a single man with average earnings of £12 a week the rate of supplement would be £1 under paragraph (a) but total benefit would be less than 85 per cent. of earnings for the purposes of paragraph (b).

On the other hand a married man with four children but with the same average earnings of £12 would receive £1 under paragraph (a), but 8s. under paragraph (b), the difference between his total flat rate weekly benefit of £9 16s. and the 85 per cent. maximum of £10 4s.

Sir K. Joseph

This is the example which we all used at Second Reading, and with which we are all sadly familiar. Would the hon. Gentleman relate this to what he said before about subsection (8, b), when he said that his right hon. Friend would have power, under the regulations, to vary the application of this rule to an individual? I am not believing what I am going to say, I am pointing out the result of what he said. Does he mean that his right hon. Friend will have power to vary the application of the 85 percent. rule for one particular £12 a week wage earner with four children, because she takes pity on that particular case? Surely not. How does (8,b) operate in its application to an individual? How is it reconciled with the objective powers of a departmental Minister? I have not understood this at all.

Mr. Pentland

What I was referring to was that the Minister can by the regulations do this. Obviously, she would not take a particular case here and there and say that that was deserving of consideration over and above the ordinary low-paid worker. The right hon. Gentleman referred to paragraph (a) of subsection (5). This defines the average weekly earnings for the purposes of the supplement as one-fiftieth of the reckonable earnings within the income tax year. At the time when a person claims benefit, the earnings to be taken into account will normally be those he had in a period ranging from a minimum of one to 13 months up to a maximum of 13 to 25 months previously. On average, earnings can be expected to be about a year out of date. To divide them by 50 rather than 52 serves to increase the rate of supplement by 4 per cent. This takes into account probable rises in earnings between the reference period and the date of the claim.

Subsection 8(g) requires employers to retain records of reckonable earnings for such periods as may be prescribed. These records will be needed if a claimant is unable to produce a certificate of pay and tax deducted for a particular tax year or if it is felt necessary to verify the authenticity of a certificate. It will also be necessary to refer to employers where the normal procedure for transferring pay records on a change of employment has broken down.

For these purposes it is intended to require employers to keep records of earnings for all persons employed by them during a particular tax year, whether or not they are still working for the employer at the end of the year. So long as the definition of reckonable earnings corresponds closely with the earnings required by the Inland Revenue to be entered on an employee's certificate of pay and tax deducted, the additional burden here for the employers should not be too great. The final lines of this subsection put it beyond doubt that records required to be kept by employers must be produced to a duly authorised inspector of the Ministry if required, by bringing such records within the documents already covered under section 90(3) of the National Insurance Act.

The hon. Gentleman referred to a matter in subsection (7). The first part of this subsection makes it clear that supplement may be paid on top of injury benefit. This was included for presentation reasons. The same result could be secured by amending the overlapping benefit regulations under existing powers. These powers will be used to enable the supplement to be paid with an unemployability supplement under either the industrial injuries or war pension schemes. The number of cases where supplement will be payable with unemployability supplements will be so small that it is not thought necessary to make a separate declaratory provision in the Bill. It is not intended however that these powers will be used to enable the supplement to be paid on top of the maternity allowance. I hope that I have touched upon most of the questions raised by the right hon. Gentleman.

Sir Edward Brown (Bath)

Can the hon. Gentleman say what would be the position of the person who has been declared redundant and received redundancy pay? Would that person qualify for the supplement during the period which he is unemployed, having received redundancy pay?

Mr. Pentland

Yes, of course.

Mr. Gower

Can the hon. Gentleman say to what supplement he was referring in connection with the maternity benefit?

Mr. Pentland

This is the normal maternity benefit. I strayed to a different part when dealing with the arguments put forward by the right hon. Gentleman.

Mr. Gower

Perhaps the hon. Gentleman has not understood me. He referred first to the payment of certain unemployability supplements in relation to persons in receipt of certain war pensions and industrial injury benefit and then he made a reference to maternity benefits. What supplement was he referring to when he spoke of maternity benefit?

Mr. Pentland

I was referring to the supplement that is to be paid over and above the maternity allowance.

Mr. Kenneth Lewis

When I look at the Clause, I understand why the Government will not amend it, because I am not sure that they understand exactly what it means. They are probably scared stiff to amend it for fear of upsetting it completely.

In looking at the Clause, I am in difficulty. It seems, at least, to affect the lower-paid worker. There are two sections of people who do not come out of this very well. One is the low-paid man and the other is the highly-paid man. The block in the middle seem to be all right, but as they are in the majority I suppose that that is all right.

I deal, first, with the lower-paid man. The Clause will get the Government and the country into great difficulty. In any event, it is difficult enough to get people to take up low-paid jobs. If they are to be asked to go into low-paid jobs knowing that they will not get as much when they are working as people in other jobs and if, in addition, they are also to be told that should they become unemployed they will not get as much as other unemployed workers, this will be a double disincentive against men taking up low-paid jobs.

I understand why the Government have done this. They do not want people to be better off when unemployed than when they are employed. That is understandable. The Bill should, however, look after the low-paid worker when he is out of work for a longer period. At least there should be something in the Bill to ensure that he is not disadvantaged in perpetuity.

I turn now to the higher-paid worker, the main earning above £30 a week. It is sometimes possible that people will find themselves for a year or two in a very highly paid job. They may then find that they have to take another job which is not as highly paid. Then, they could be caught by the Bill—at least, that is how it appears to me; I should like guidance on this—because they have not been subject to unemployment pay for a certain period of time. They suddenly come into a job in which they become eligible for unemployment pay, but they have not paid the necessary contributions.

How does the Bill affect those people? It is wrong for any of us to assume that people who get large incomes will get those large incomes during the whole of their working life. These two categories of people, the very low paid and those who are highly paid, are not much assisted by the Bill.

Another matter which has puzzled me a great deal is subsection (8, b), which states that the Minister may vary the provisions of subsection (4)(b)…for the purposes of the application of this section to any particular case or class of case". Will the Minister come to the House to ask our permission, or will the Ministry, through its civil servants, be able to deal with a case in complete isolation?

8.15 p.m.

When the Joint Parliamentary Secretary spoke a few minutes ago, he let slip the kind of case which he thought might be brought under the subsection. He said that should a person be in hospital these provisions would be brought to bear so that the amount due to the patient would be increased taking into account what he had to pay in hospital. Does this apply to somebody who is a private patient? I should not have thought so. In any event, what fees do people have to pay when they go into hospital? Are we being asked in the Bill to provide a plus payment for people who go into hospital? In hospital, they get free board. Not only do they get treatment but they are looked after during the whole of their stay. Perhaps the Minister will explain this.

What other cases has the hon. Gentleman in mind? What other variations will there be? Is there any precedent for this? I cannot think of any regulations covering payment by the State in which a Minister has taken unto himself power to vary the payment or to tell his civil servants that they can have a cockshy at it. If that were to be the situation, it might be all very well for those who get the increased benefits, but what about George around the corner who thinks that John has had a little bit more than he has and that he should not have had it? People are only human in these matters. There is great danger in the Minister taking for herself powers to vary payments in this way. I should like further clarification, because the position is not at all clear.

Mr. Gower

Before we part with the Clause I should like to pay tribute to the efforts of the draftsmen who have assembled, I would not say into a completely intelligible form but into something which is semi-intelligible, a mass of such difficult material.

I follow the point made by my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis). I may be wrong about this. If I am, I apologise to the Minister and to the Joint Parliamentary Secretary in advance. I imagine, however, that this is the first case in a Bill of this kind where power to vary payments has been taken on such a scale by a Minister. This is a double-edged weapon and I warn the right hon. Lady about it now. I hope that if the Minister is taking this power to vary, she is also assuming the responsibility of answering Questions in the House. That is some undertaking, because the right hon. Lady will be faced by Questions from both sides asking why, in certain cases, she has varied the payments. No doubt she will tell us something about this.

In the past, analogous powers to vary have been held by, for example, the National Assistance Board, but those powers have not been questionable in the House. It has not been open to an hon. Member to ask the Minister of Pensions and National Insurance why Mr. A. or Mr. B has received a certain amount of National Assistance whereas Mr. C, whose circumstances appeared to be similar, has received more.

Mr. Kenneth Lewis

I am not sure that my hon. Friend is correct. In the help that it gives, the National Assistance Board has to apply certain regulations. It can vary payments only in giving additional assistance for coal and things of that kind.

Mr. Gower

It is wrong to suggest that the payments are based upon any inexorable, inflexible scale. They are discretionary powers within the true meaning of "discretionary". I agree that the National Assistance Board undoubtedly has a standpoint which it applies. However, they are not open to question in the House. The right hon. Lady will, I imagine, be open to question in the House.

I should like her to confirm whether, in this kind of legislation, social and National Insurance legislation, this is the first occasion on which such powers have been taken to vary benefits. Secondly, I should like her to confirm that in assuming such powers the Minister will be prepared to answer for the exercise of these powers to vary.

Mr. Pentland

The main issue with which I was concerned, and with which, I hope, the hon. Gentleman is as still concerned as he was previously, was the question raised on subsection 8(b). I read again what I said: this enables the benefit ceiling formula to be varied; the powers will be available for cases where the amount of flat rate benefit in payment is less than the standard rate—for example, where there has been a contribution deficiency or the claimant is subject to hospital in-patient reduction.

"Case" does not mean an individual case, but rather a situation or case which can apply to a group of people; not only one particular person; this can apply to a group of people. For example, there is the case of hospital reductions, which has been mentioned by the hon. Gentleman the Member for Barry (Mr. Gower); this could apply to a group of people. There is no question of the Minister being able to vary the ceiling for a particular individual. I want to make that clear.

The powers given here will be exercised by regulations. The point is that where the flat rate is a reduced one—for example, where, as a result of the hospital considerations which I have just referred to, or there was less than 50 contributions—it is possible to allow the supplement. This is by virtue of regulations which will be brought forward, to allow the supplement to go higher without providing an excessive total benefit.

Mr. Kenneth Lewis

I am still a little concerned about this. First of all the hon. Gentleman gives an example. By virtue of the fact that he gives an example there is the implication that there are other possibilities; but he does not state those possibilities. When rereading his original speech just now the Joint Parliamentary Secretary gave an example of the kind of thing which could happen. One must presume from that that it is only an example and that there are other possibilities.

The Clause does not mention hospitalisation. It is a blanket which could cover other things. That is the second point.

The third question I would ask the hon. Gentleman is, can he give me any guidance whether this has already happened with National Assistance in hospital cases? I have an idea at the back of my mind that I have had letters written to me from time to time saying that people who have gone into hospital have not had additions because of what were minor hospital charges.

Sir K. Joseph

I think we are getting somewhere on subsection (8,b). It seems—the right hon. Lady will, no doubt, enlighten us—a very sensible proposal, but it is drafted in language so wide that it could be used for any purpose. Would the right hon. Lady tell us whether it is much wider in scope than the Joint Parliamentary Secretary has so far indicated, and, even if not, would she be willing between now and Report to look at this to see if the drafting can be narrowed a little? The example which the Joint Parliamentary Secretary has given seems to us to be very sensible. It seems that it will enable the right hon. Lady to help the low-paid wage earner. That I would applaud, but, as drafted, the paragraph will enable her to do practically anything, and I should like her to look again seriously at the drafting.

Perhaps the right hon. Lady would fill in a few other gaps. The Joint Parliamentary Secretary did not answer the point on subsection (5, a) made by the hon. Member for Liverpool, Walton (Mr. Heffer), namely, the case of people out of work quite a bit, and that a shorter period than one year should be taken—perhaps 16 weeks divided by 16 or some such procedure. That was put forward by the hon. Member in his Second Reading speech. The Joint Parliamentary Secretary did not reply to my question about subsection (8, e), why the Minister should have power to vary the relevant tax year.

There are two other points I did not raise before on which I should like guidance. I have not found in the Bill—no doubt, it is my fault—whether the procedure to bring in regulations will be the positive or the negative. That is, perhaps, my fault for not being successful in my hunt. The second new question is, could the right hon. Lady tell us what happens to people who are ill on the appointed day? If people are ill on the appointed day and have already been ill for 12 days, will they at once qualify for graduated benefit or will they have to accumulate 12 waiting days? Perhaps it is a question of which the right hon. Lady would like notice.

However, the principal points on which we should like guidance are subsection (5, a) and subsection (8, e), the type of procedure for regulations and our old friend subsection (8, b) and whether the right hon. Lady will reconsider the very wide drafting, although we thoroughly approve the purposes individually instanced to us by the Joint Parliamentary Secretary.

8.30 p.m.

Miss Herbison

I will try to answer the points which have been raised, although my hon. Friend the Joint Parliamentary Secretary has dealt very well with a great number of them. I will deal, first, with the regulations. These will be subject to the negative Resolution procedure, but, of course, they will go to the Advisory Committee beforehand. I think that the right hon. Member will realise what that means.

Next, I take subsection (8,b). The right hon. Gentleman says that the powers here are very wide indeed, and the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) seemed to get into a morass of hypothetical questions and hypothetical cases. I shall try to clear up some of these difficulties. It would give us power to help the low-wage earner, about whom, I think, all of us are worried. Yet we all realise that we have to have the 85 per cent. ceiling. But where one can help the low-wage earner, one wants to do it, and we have been giving a great deal of thought to that category in another connection.

The way to help the low-wage earner, whether he is in work or out of work—and even if he is in work his family can suffer very grave disabilities—would be by some other form of family endowment by which the 85 per cent. ceiling would scarcely touch any worker in the country. So, where we can help, we want to.

If we take the low-wage earner who, for one reason or another, has a deficiency in his contributions, whether it be pension, sickness benefit or unemployment benefit, regulations made under subsection (8,b) could help us deal with his situation. We also have regulations at present dealing with the other side of it, when a man or woman is in hospital after a certain time and there is a reduction in the benefit paid. We have those regulations already.

The right hon. Gentleman is afraid that it is very wide. The safeguard lies, first, in the fact that the regulations can be debated in the House and the National Insurance Advisory Committee will be examining them.

I think that I have said sufficient on subsection (8,b) to show that we are not concerned about any individual case but with groups of people.

Mr. Gower

In subsection (8,b) it says that regulations may vary the provisions of subsection (4,b) for the purposes of of the application of the Section to any particular case or class of case. Does that not imply that there may be a case?

Miss Herbison

The hon. Gentleman means an individual case of a person in hospital. Each case will be an individual case of a contribution deficiency or a time in hospital, but the regulations will be general regulations dealing with cases.

I turn now to the point about the relevant tax year. As I have said on other Amendments, this is an interim scheme. We intend to take the previous tax year. The man will have his P. 60, and we hope that that will cut out a great deal of work. It is the previous tax year, and it may be that, when the full scheme is worked out and we have some knowledge of the way in which it is working, we will want to alter it.

Under the scheme no account will be taken in the man's income for the year of sickness and unemployment benefit. The T.U.C. was a bit worried about that. When we come to our full-blown scheme we hope that not only will we give consideration to what might be done to vary the tax year, but to the period on which we should estimate what the earnings-related supplement should be.

Sir K. Joseph

What about subsection (8e)?

Miss Herbison

Subsection (8, e) deals with the relevant Income Tax year. I thought that I had already dealt with that, unless there is some other point.

Sir K. Joseph

The right hon. Lady has dealt with it adequately on subsection (5, a) where the point was the one raised by the hon. Member for Liverpool, Walton (Mr. Heffer), that it might help the low-paid worker if something shorter than a year was the comparison. Under subsection (8, e) we find that she is to make regulations giving her power to alter the Income Tax year, and that is quite a different point. The previous point was the length of the comparative period. Now we are discussing which Income Tax year should be taken. Can the right hon. Lady answer that?

Miss Herbison

Where the Bill says in subsection (8, e) that Regulations may— (e) provide that the relevant income tax year for the purposes of earnings-related supplement shall be such other income tax year than that specified in subsection (5)(c) of this section as may be prescribed by the regulations it will be a matter that we may prescribe by regulations. These regulations will be brought to the House, and, in the nature of things, they will go to the Advisory Committee.

This point has come in at a rather late stage, and I am sorry that I am not able to give the detailed information which I gave on the other one. I shall look at it, and perhaps I can get in touch with the right hon. Gentleman, or give him the information on Third Reading.

Sir K. Joseph

Perhaps the right hon. Lady will deal with it on Third Reading.

Miss Herbison


Mr. Maddan

The right hon. Lady explained the purpose of these variations, but the point to be considered is the cost which may arise to the National Insurance Fund. When we were discussing the Money Resolution on Monday of last week, the right hon. Lady said: Not a penny for the purposes of the Bill will come out of the Exchequer."—[OFFICIAL REPORT, 7th February, 1966; Vol. 724, c. 146.] How does the right hon. Lady visualise being able to vary these to help people? What sum of money does she visualise may be involved? Are they to be financed out of the reserves of the Fund, or from increased contributions? May the variations lead to increased contributions? I think that before we leave this Clause the right hon. Lady ought to tell us something about that.

Miss Herbison

The Money Resolution covered the administrative side, and had nothing to do with the benefits provided by it. All the benefits, even those which will be included in any regulations which are made under subsection (8, b). will come out of the ½ per cent. a side.

Sir E. Brown

I should like to refer to the P. 60 to which the right hon. Lady made some reference during the Second Reading debate. If the Bill is intended—

The Temporary Chairman (Mr. Thomas Steele)

Order. We are not on Second Reading.

Sir E. Brown

If this Clause, which is part of the Bill, is to come into operation in the autumn, I presume that the P. 60 which will operate to cover the earnings for the period will be the one ending in April of the current year.

Miss Herbison

I made that clear on Second Reading to ensure that workers would hold on to the P. 60s which they received from their employers after April of this year.

Sir E. Brown

This is a very important point which ought to be reiterated to make sure that it is understood.

Question put and agreed to.

Clause ordered to stand part of the Bill.