HC Deb 16 February 1966 vol 724 cc1412-8
Sir K. Joseph

I beg to move Amendment No. 5, in page 6, line 22, to leave out "three hundred and twelve" and to insert "four hundred and ninety-two".

This is a probing Amendment, on a very technical point. Until the Bill comes into force, an unemployed person is entitled to 180 days' benefit, with a further potential 312 days' benefit, subject to the state of his contributions. This may be a sensible thing to do. The Bill substitutes 312 days for 180 days, but of course at the moment an unemployed person has, potentially, the aggregate of 180 days' and 312 days' benefit, which is 492 days, subject to his contributions being in good order. It would appear at first sight that the result of the Bill will be that some unemployed people will have their potential period for benefits, which is theirs as of right, reduced from 492 to 312 days. I do not expect, when the right hon. Lady has finished explaining to us, that there will be this difference, but on the face of it it looks as if the Bill will disadvantage some unemployed people who are in good contribution status.

That is why the Amendment proposes to replace the 380 days with the aggregate of the previous periods, namely, 492 days. We should like to hear from the Minister whether we are right in our asumption that the Bill might disadvantage some unemployed people. If this is so, we shall want to consider the Amendment very seriously. If we have misunderstood the position, the Amendment will have served its purpose in showing us where we were wrong.

Mr. Dean

I followed the arguments of the right hon. Lady on Second Reading, and I can see that there is a strong argument for saying that the maximum period for which benefit can be payable should be the same. In many cases the actual contribution record of the person concerned depends on the luck of the draw, on whether he happens to be in stable employment or not. I follow the argument for having a standard period applying throughout, but it appears, as my right hon. Friend has said, that instead of selecting—as one might have hoped the right hon. Lady would do—the top level, the maximum period for which anybody can be entitled to benefit at the moment, she appears to have selected the bottom level.

Surely, one of the matters of which we are constantly reminded in considering this Bill is that, in dealing with short-term benefits, we are at the same time focusing attention on the difference between the short-term and the long-term. This is an argument for saying that when, as now, it is desirable to have a uniform level, we should take the longest period which is available at the moment rather than the shortest.

Miss Herbison

I think that the right hon. Member for Leeds, North-East, (Sir K. Joseph) has explained the Amendment clearly. He wants to ensure that instead of there being benefit for 12 months, as the Bill would provide, there should be benefit for the longest period that anyone can receive benefit at the moment—which goes up to 19 months. I think that the hon. Member for Somerset, North (Mr. Dean) misunderstands when he says that we have chosen the shortest period. We have not. The period can at present be from seven months to 19 months, dependent on the contribution record of the person who becomes unemployed—seven months with a poor record and 19 with a good one.

I believe that the hon. Member for Somerset, North, was concerned about the fact that the Bill does not set out to deal with the long term sick, just as it does not set out to deal with the long-term unemployed. This is a Bill to provide earnings related unemployment and sickness benefit as quickly as possible. That is the first thing which we have to take into account. We could divide into two categories the people who are unemployed for more than one year. The first comprises those people who may have some special reason for being unemployed—not all of them, although in these days of full employment it is almost certain that there is some special reason why someone is unemployed for over a year. These people may be unemployed because of some disability or some health or social factor. That is one set of people who could be unemployed for more than a year.

The other set are people who are unemployed and who may have private means of their own. We have had Questions put about the person who retires with a very good occupational pension. Alternatively, these people may have some other private means. Frankly they are not interested in further employment. If that is the case we cannot say that this second class of person will suffer as a result of the Bill.

8.45 p.m.

The first class consists usually of people who have been in industry and have had, perhaps, a record of unemployment. These are usually the people who are getting about seven months' unemployment benefit at present. Under the Bill, instead of seven months they will get 12 months. Everybody will get 12 months—six months with earnings-related supplement and six months flat-rate benefit. The second class of person I mentioned will get 12 months benefit instead of 19 months.

Because of my concern and the concern expressed by hon. Members on both sides of the House, only this week we asked the National Insurance Advisory Committee to look into the whole question of occupational pensioners. It does not follow that every occupational pensioner has a big pension, but quite a number have. It therefore seemed to me that for this second class of person there was no sound reason for extending the period of unemployment benefit beyond 12 months. They will not lose from the Bill. This second class, in the main the high wage earners, will benefit under the Bill by six months earnings-related supplement on top of the flat-rate benefit, and then the six months flat-rate benefit. If we add these together it comes very near to the 19 months benefit they are getting at present. It seemed to us that perhaps this was a fair way of doing it—giving five months extra benefit to those who for no reasons of their own had a poor contribution record and giving 12 months benefit to the others.

If I accepted the Amendment the cost would be £15 million a year, and most of the extra expenditure would go to people with private means—people who throughout most of their lives have had a very good employment record and about whom it might be said that their interest in finding another job is open to question. That view is not a view which I alone express; it has been voiced by hon. Members opposite. It seemed to be wrong to increase the cost by £15 million on those grounds. The problems of the long-term sick and the long-term unemployed are very human problems, but this Bill is not the vehicle which we should use to deal with them.

Mr. Dean

I am obliged to the right hon. Lady for that explanation. Would she give one additional piece of information; how many people are likely to have their period of benefit reduced?

Miss Herbison

Perhaps I should have added that there are transitional arrangements involved here. If, when the provisions come into operation, someone has a right to the 19 months and had been unemployed for only a few months, that person would continue to get benefit right up to the limit of the 19 months. For the others, who became unemployed after the operation of the Measure, the provisions will apply to them. It would be difficult to place an exact figure on the numbers adversely affected, but the cost is a fairly high one—according to the Actuary, it would be £15 million.

Sir K. Joseph

I do not wish to delay the Committee, but since the Minister stated that the cost would be £15 million, would she, first, say whether that sum represents a disadvantage to certain people? In other words, will there be a £15 million loss for a certain group of people, or is it simply that the cost would bring into benefit people who are not now, for legitimate reasons, getting the full 19 months?

Secondly, I hope that the right hon. Lady, in putting forward what seems a reasonable case, will not prejudge the issue which she has sent to the Advisory Committee.

Thirdly, I had assumed that all people seeking unemployment benefit had to show that they were genuinely available for work before they were successful. However, there may be deep waters here which I do not understand, and I realise that the right hon. Lady has referred this matter to the Advisory Committee. We do not wish to press the Amendment, and I will gladly withdraw it if she will say whether the £15 million represents a disadvantage to existing beneficiaries or is merely the cost of applying the Amendment.

Miss Herbison

It is the cost, although it is difficult to separate the two. If the Amendment were accepted—which would mean giving 19 months instead of 12 months benefit, and the latter part of it would be a flat rate benefit—the cost would be £15 million. Those extra months would cover the people who at present are getting only seven months benefit, who under the Bill will get 12 months and who under the Amendment would get 19 months.

The right hon. Member for Leeds, North-East (Sir K. Joseph) asked if those who were unemployed had to show that they were genuinely seeking work. I would not like to say anything on this issue. It is for this and many other reasons that I decided to make the reference to the Advisory Committee. It must be remembered that many of these people who retire with good occupational pensions go to areas—and I do not in the least blame them for doing this—where it is difficult to find work. It would, therefore, be wrong to dub people as not genuinely seeking work. Indeed, I would not like to go back to that. I hope that the Advisory Committee will give us its report on this matter, and I do not want to prejudge it.

Sir K. Joseph

In the light of the right hon. Lady's further explanation, 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

I wish to raise one big point and one smaller one. The smaller point is that I would be grateful for a layman's explanation of the words in lines 12 to 15, in page 6. I am sure that there is a lucid, clear reason, but it escapes me.

The big point, of course, concerns the words at the bottom of page 5. I gather that what is being proposed in subsection (1) is that the right of unemployment pay shall be withdrawn for the second three days of any six days of suspension. I quite understand that the Minister expects both sides of industry to negotiate about the effects and repercussions of this bombshell—and it is a bombshell to industry. I think that on both sides of industry collective agreements have been based on unemployment pay being available for this period.

I can well imagine that arguments can be put forward to show some reason why this proposal makes sense, but the Minister must understand that it will cause a large reaction in industry when costs and risks which employers have legitimately thought were covered by their insurance contributions should suddenly—and, so far as I know, without notice, but the Minister will tell us whether this follows notice—be thrown back at the employers to bear themselves.

Where the ultimate cost of this—I am not quite sure whether it is three days or six days that was covered—which is now covered by unemployment insurance, but will not be covered by unemployment insurance from three years after the appointed date—will ultimately fall as between employers and employees is for their own negotiations to determine, but the right hon. Lady must realise that she is having some effect on industrial costs as a whole by this proposal, and has shattered to some extent expectations based on the insurance contributions which employers have made, and are making, and which they were perfectly entitled to assume would cover them from the first six days of any suspended period.

We look forward to a full explanation from the Minister of this part of the Clause, and a technical explanation, please, in lay language, of the first point to which I referred.

Miss Herbison

I will deal with the second point first. We made clear on Second reading why we had decided that earnings-related supplement should not be paid for periods of suspension lasting less than six days. We also tried to make clear why the flat-rate benefit should continue for three years, and thereafter should also stop. We have no doubt that the employer who, for one reason or another, wishes to retain a worker—and it is sometimes important for industry that a worker should be retained—should bear the cost of that retention. The cost will be borne by the employer, and not by the worker. We felt that unemployment benefit ought not to be used for this purpose.

Again, I made it clear that we would look at this question after 18 months, with the hope that within that time it would be clear that employers and employees were getting together and were ready to come to agreements. Some of the very best employers already have these agreements, and we hope that all employers will be ready to make these agreements with their workers. We realise, of course, that this will be an additional expense to the employer but, again, in other industrial countries, as far as I can gather, with the proviso I made before, employers pay more for social security and social provisions than sometimes is the case in this country. We were therefore very much aware that this will mean additional finance that will have to come from the employer.

9.0 p.m.

I turn to Clause 3 (l,b,ii), which says: a person's employment in an employed contributor's employment may be treated as having been, or as the case may be as not having been, suspended". I can understand the right hon. Gentleman finding difficulty about this. I read it slowly to see if the sense of the matter would get home. I thought it had got home, but perhaps the right hon. Member will tell me. If we go back we find that there are amendments to the Unemployment Benefit and Sickness Benefit Regulations. This amendment is necessary to ensure that the general provisions of this Bill are met. The right hon. Member asked for the explanation to be given in lay language. This is one of the provisions which will ensure that the general provisions which have been explained very carefully will be carried out.

Question put and agreed to.

Clause ordered to stand part of the Bill.