UNEMPLOYMENT BENEFIT (MR. THAIN) (Hansard, 27 July 1966)

§ Mr. Peter Doig (Dundee, West)

On the Adjournment tonight I wish to raise the case of one of my constituents—a Mr. Thain—who in my opinion has had a very raw deal in relation to unemployment benefit. Because he has a wife and two children his weekly rate of benefit is £9 1s. 6d., his daily rate being £1 10s. 3d. This man was paid off on 31st May—a Tuesday evening. He received no unemployment benefit for the Wednesday, Thursday or Friday, because he had to have three waiting days. He received no unemployment benefit for the Saturday, because this was not a normal working day for him.

He was put off the following week for the Monday, Tuesday and Wednesday—6th, 7th and 8th June—for which he received three days' benefit. He restarted work on Thursday, 9th June, so that, excluding Sundays, he was off for seven days. For those seven days he got three-sixths of the weekly rate, or three days' benefit, simply because he was a five-day week worker. Had he been a six-day week worker he would have been paid benefit for four days, or a weekly rate of four-sixths, yet both the five-day week worker and the six-day week worker generally work the same number of hours in a week.

It seems quite wrong that one man should receive only three days' benefit while the other receives four days' benefit. If these workers are sick there is no difference in the benefit they receive; they both receive four days' benefit, or four-sixths of the rate.

I took this question up with the Minister of Labour by correspondence, and in his reply he said that it would be very difficult to work out a rate for each working day in respect of a five-day worker in a way which would give him an additional one-sixth, but if this can be done in the case of sick benefit I do not see why it cannot be done with unemployment benefit.

1860 In the reply I received I was referred to the debate in 1957, and was told that the position was fully discussed then. That is true. I have looked up the records. But in that debate every Labour speaker, including those on the Front Bench, spoke against the existing Regulations. It seems strange that the Government should now seek to justify a measure which they opposed when it was first put forward, and which made people worse off at that time, and to have the nerve to say that the question was fully discussed in 1957.

At that time the Labour Party was in favour of adopting the courses that I am arguing. If these are the Regulations I do not expect any change now, but I expect the Minister to say that he recognises the existing position as unfair and that he will take steps to change it, by legislation. But they have not done this.

I come now to the details of this case. On a 40-hour week, which is now normal for five-day or six-day workers, this man worked two days, or 16 hours on a five-day week. The person who is on a six-day week and works the same number of hours in the week, in two days would work 13⅓ hours, so the advantage which the five-day worker has in wages is only a difference of 2⅔ hours for that week, yet he loses the whole day's benefit. This is wrong. It is unfair and something which our people spoke against when it was passed. It is something which they ought not to accept now.

They should take another look at this. If they have the power to change it by Regulation or by interpretation of existing Regulations, they ought to recompense this man for what he has lost. If they do not do this or they cannot do this they ought to say that they will take steps at some time in the future to change the Regulations. The present system is totally unfair, probably not only to this man. There must be many more in the same position.

It is unfair to five-day workers. It does not seem to matter which day they go off, because while the Regulations say that unless they are off for the whole of a calendar week they cannot be paid for the Saturday, in fact it does not matter when they go off because, as they work only five days, they cannot possibly be paid off on a Saturday, so they will lose 1861 the Saturday anyway, whichever day they are paid off.

It is wrong that a man should be unemployed for eight days and receive only three days', or half of one week's benefit. The excuse for this is that it would be very difficult to administer it on a different daily rate, but we find that the six-day-week worker gets sickness benefit for the Saturday, so I can see no justifiable reason for refusing benefit to a five-day-week worker for a Saturday.

§ The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Norman Pentland)

I fully understand my hon. Friend's concern about his constituent's unemployment. Many of us who represent industrial areas have over the years had to deal with similar cases in our constituencies.

Mr. Thain, my hon. Friend's constituent, was unemployed from 1st to 8th June because of a stoppage of work due to a trade dispute in which he was not involved personally. His employment was not terminated but he was suspended by his employer. The first three days of his unemployment were waiting days. The next day, Saturday, 4th June, was a day on which he would not have worked in any case and for which benefit could not therefore be paid. Benefit was, however, paid to Mr. Thain in respect of the three days, 6th to 8th June, at the full rate for a married man with three children.

The amount of benefit payable was one-sixth of the appropriate weekly rate for each of the three days. This method of calculation is laid down in the National Insurance Act and it has applied all along to any day of unemployment or incapacity for work. My hon. Friend has suggested that his constituent and others who work a five-day week suffer a double disadvantage by not being able to obtain unemployment benefit for Saturday because it is a day on which they do not normally work and by being paid only one-sixth of the weekly rate of benefit for the days on which they qualify for benefit.

Let me explain straight away that where a man has lost his job or is sick it makes no difference at all whether he is a five-day week worker or not. Every day of unemployment or sickness carries benefit at the rate of one-sixth of the 1862 weekly rate and the man who is off work for part of the week gets the appropriate proportion of the weekly rate of benefit.

The rule that unemployment benefit is not paid for days when the claimant would not normally work applies only in certain limited circumstances. In the first place, it applies only where employment has not been terminated. Even then it does not apply if the claimant is off work for the whole week; he still gets a whole week's benefit. It is only when a claimant still has an employer and has worked for part of the week that the rule applies. This normally occurs during short-time working and very short periods of temporary lay-off, such as that experienced by Mr. Thain.

It is, or should be, well known to hon. Members on this side of the House—and I say this in answer to my hon. Friend—that we opposed the introduction of this rule in 1957 because we could see the anomalies and complications which were likely to flow from it. Experience of its operation has illustrated all too clearly how right we were in 1957. As my hon. Friend knows—and this is in reply to his question about the steps which the Government intend to take to try to overcome this difficulty—we have already taken steps under the legislation introducing the new earnings-related short-term benefits to make fundamental changes in the conditions under which unemployment benefit is to be paid in the future to workers whose employment has not been terminated.

The Government see the proper maintenance of workers in this situation as primarily the responsibility of the employer concerned and not of the general body of contributors to the National Insurance Fund. These changes will not come fully into operation until 1969. The reason is that we were determined to give both sides of industry ample opportunity to negotiate suitable arrangements, but in the meantime we must operate the law as it stands.

The question whether five-day week workers should be paid one-fifth of the weekly rate was raised, as my hon. Friend said, during the passage of the National Insurance Act, 1957, which introduced the normal idle day rule. There were at that time many administrative considerations which made it impracticable 1863 to do this, and I am afraid that I must tell my hon. Friend that the difficulties which existed then are still as great today.

For practical purposes, as I have explained, the problem is largely confined to five-day week workers on short time and those suspended for short periods, and to depart from the well-established principle of a standard formula for determining the daily rate of flat-rate benefit for everybody would be in the Government's view to take a very large hammer to crack a comparatively small nut.

It would not be practicable to confine payments in fifths to those affected by the normal idle day rule, nor would it be possible to abandon payment of one-sixth of a week's benefit for each day in the case of those who work on six days a week. Although many people now work a five-day week, there are still some millions who work on more than five days a week and there are, of course, some shift workers who do a full week's work on four.

If the daily rate of benefit had to be governed by the extent of the claimant's working week, the difficulties would be enormous. It would slow up the payment of benefit and add appreciably to the number of staff needed to handle claims. Where the extent of a claimant's normal working week has to be established under the law as it stands, it is the individual record of employment and not the general practice in a particular firm or industry which is the governing factor. For example, a record of fairly regular Saturday overtime by a man in what is regarded as a five-day week job may establish him as a six-day week worker.

Furthermore, workers who change their jobs, as many do in the course of a year, may also change their status as four, five or six-day week workers. The difficulties in administering a scheme with two or more different bases for calculating benefit for odd days would certainly be out of all proportion to the amounts involved for individual claimants.

Under the present scheme, days of unemployment and days of incapacity for 1864 work carry the same rate of benefit and there are very sound reasons for this. This would mean that any change in the method of calculating the daily amount of benefit could not be limited to unemployment benefit alone but would have to be extended to sickness benefit, which is also payable on a daily basis. The millions of sickness benefit claims each year are generally made by post and it would be a quite impossible task to establish in each individual case whether the claimant was a five or six-day week worker. But to apply arbitrary rulings which might or might not accurately reflect the actual status of the claimant could mean that people who were unemployed or sick for the same period would get different amounts of benefit, and this could only lead to more anomalies and more confusion.

We all accept that cases can arise, like the one to which my hon. Friend has referred, where the logic of the particular situation suggests that a daily payment of benefit at a fifth of the weekly rate would be justified. But the general application of such a principle to the whole field of unemployment and sickness benefits is not a practical possibility under the present scheme at the present time.

Having said that, it does not mean that future developments in the scheme and in the technique of handling claims could not eventually lead to changes. I assure my hon. Friend that it could well mean that changes would have to be made in future. However, I have pointed out what the Government view is at present, which is that the real remedy for the situation to which my hon. Friend drew attention is to secure that all employers follow the example of the good ones who provide their employees with continuous employment or a proper guaranteed wage. That is the position we want and it is the Government's objective to achieve a solution to this problem in future along the lines I have outlined.