HC Deb 23 May 1968 vol 765 cc927-45


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

Mrs. Hart

During the Second Reading debate on 2nd April, I said that we would look again at the proposal embodied in the Clause to abolish retrospective payment for the first three days of absence from work due to sickness, injury or unemployment. Having had that further look, we do not propose to proceed with the Clause. I come to bury Caesar, not to praise him. None the less, hon. Members are entitled to a full explanation.

There has been a lot of speculation about Clause 2 and a lot of misunderstanding about what it would have done. In particular, some members of the Press did not understand what these rules were about. I deal, first, with the detail. Benefit is never paid for isolated days of absence from work. That is the basic rule. It is only when someone has been away from work for two days within a period of six days that there is any question of their being entitled to benefit.

The next stage is the waiting day rule. No payment is made for the first three days of absence until there has been a total of 12 working days incapacity or unemployment, or both. To put it in another way, not until a person has been away from work for a fortnight will he be paid benefit for the first three days. The fortnight need not be a continuous period, because spells off work within the same 13-week period are linked for benefit purposes. Most people do not get any advantage from the current waiting day rules. Either they are away from work for less than 12 days—and well over half are away for less than 12 days—or they get occupational sick pay and, because of adjustments by the employer, more national insurance benefit means less sick pay.

6.30 p.m.

In other words, the employer very often recoups the national insurance payment. They may claim supplementary benefit to tide them over and, when National Insurance benefit becomes payable for the waiting days, it is withheld as an offset. They have already had it and cannot have it twice. There are earnings related supplements, which have been discussed by my hon. Friend the Parliamentary Secretary in another context. There is the problem of the incentive—if there is one, and it is debatable—that the rules give to prolonged absence just over the edge to the point when the three waiting days benefit might become payable. All in all, the loss on waiting days would only affect a minority of sick or unemployed workers.

On the other hand, the fact that it is a minority does not mean that we must not pay very careful regard to the needs of that minority. If there is one victim left by the roadside, it does not mean, because he is the only one, that the good Samaritan does not rescue him. While, in national insurance, the State has to cater for groups rather than for individuals, many problems that we are tackling now are minority problems, and none the less important for that.

There was a context to Clause 2 which I could not mention during the Second Reading debate, but I can mention now. When the Bill was prepared, we were working towards discussions with the T.U.C. and the C.B.I. about the relationship between state benefits and employers' payments. Until the discussions had begun, as they now have, it would have been premature to mention them during Second Reading. We could not know whether the talks would offer an early means of dealing with some disadvantages of waiting day payments without making anyone worse off. In other words, the minority who would have been affected by the application of the Clause and the withdrawal of waiting day payments could be covered by an extension of employers' sick pay schemes, and, in that case, no one would be damaged by Clause 2.

The discussions having begun, it is clear that they will be extremely useful to the Government and to both sides of industry in a wider context. It is now clear that the specific questions of waiting days and employers' sick pay cover can best be considered in the context of the plans for the new earnings-related scheme. There will not, therefore, be developments in the immediate future which would provide further reasons for proceeding with Clause 2.

I hope that hon. Members on both sides of the Committee will accept that the Government have taken very full account of their views which have been made clear in various ways. Two main arguments were put forward against the Clause. One was that employers would have to carry the cost if the State withdrew. The second was that all the arguments about workers who did not need the money would be of little consolation to the workers who did. In particular, attention was drawn to the fact that the gaps in the provision made by employers for their employees during sickness mainly existed among lower-paid workers. The gaps often meant that the hourly paid worker on the factory floor did not have the same kind of sick pay employers' cover as the office worker, and, by the time the lower paid worker without an employers' sick pay scheme had been off sick for a fortnight, he could make a very good use of the three days' sickness benefit which then became payable. Both are good and reasonable arguments.

I am very glad, and I am sure hon. Members on both sides are glad, that we have now found it possible to see this in the context of the wider scheme and of the talks we are now having. The Committee will equally understand that I could not at that time reveal the context of the talks into which we were about to enter, since it would not have been proper to do so.

In that context, I ask leave to withdraw the Clause.

Lord Balniel

The right hon. Lady makes her speeches so charmingly and so lucidly that it is difficult to be too argumentative in reply.

The matter which she has been discussing is of considerable importance. The Clause which she seeks to withdraw is the basis on which family allowances are being financed, and the Clause ends the payment of the first three days of insurance benefit for those who have been ill or unemployed for a period of over a fortnight. It cuts insurance benefit for the longer term sick and for the longer term unemployed, and this is the first proposal to cut sickness and unemployment benefit since 1931, a date which is becoming increasingly symbolic for the Government.

On Second Reading, I stated our position on behalf of the Opposition absolutely clearly. I said that it was our intention to vote against the Clause and that we would remove it, so far as we were able to, in Committee. Since then not a sound has been heard from the Government, not an Amendment has been put down, until this week and, typically, all we have had are leaks from the Labour Party caucus meeting. I hear now from the right hon. Lady that we are attending the burial of the Clause. She has made a most skilful retreat and, after her speech, I hesitate to intrude on the grief which the right hon. Lady must feel in removing the Clause.

Two months ago the right hon. Lady introduced the Bill so gaily and so blithely, and I have no doubt that she fought a violent battle against her Left-wing hon. friends. She introduced this concept, she prepared the Bill, she advocated that the House should approve the Clause, and I have no doubt that she believed that this was the right thing to do. No doubt the right hon. Lady fought a very gallant battle.

This week the Guillotine has been descending with ever-increasing rhythm on debates in the House, and a different kind of guillotine has now descended upon her Bill. By withdrawing the Clause, the right hon. Lady has literally cut the Bill in half. She has removed one of the two effective Clauses, and she has literally halved the Long Title. I welcome the decision which the right hon. Lady has taken.

After the Second Reading debate I and my hon. Friends, on 3rd April, put down the following Amendment: Page 2, line 36, leave out Clause 2. This radical, reforming Government, on 20th May, put down the following Amendment: Page 2, line 36, leave out Clause 2. I do not think that this burial service should be entirely like the burial service of Sir John Moore, without a funeral note, darkly at dead of night, without any discussion or any comment.

As Her Majesty's Opposition, we have a duty to conduct an inquest into the burial. The removal of this Clause epitomises the crass incompetence with which the Government are handling then-legislation. It epitomises the muddle which is the sole thinking now existing in social welfare legislation and, for that matter in all other legislation. It epitomises the panic reaction which followed devaluation. What confidence can there be in a Government who introduce such a muddled, mistaken and panic-stricken Clause in a social welfare Measure?

The former Leader of the Liberal Party, the right hon. Member for Orkney and Shetland (Mr. Grimond) said last week that he thought that the mishand- ling of Government business was not Fascism, but sheer incompetence. In fact, it is Socialism and sheer incompetence. Socialism and sheer incompetence are synonymous and interchangeable. It is crass incompetence—

Mrs. Hart

Oh, come.

Lord Balniel

No, I shall be repeating the phrase ad nauseam, It is crass incompetence that the Government, first of all, allowed the economy to slither into devaluation, necessitating the rescue Bill which we are discussing. It is crass incompetence that, after three and a half years of a social security review, the method that the Government chose to finance the elimination of child poverty was to discontinue the payment of sickness benefit and unemployment benefit for those who had been sick or unemployed for over a fortnight. It is crass incompetence for the Government to introduce a Clause cutting sickness benefit and unemployment benefit without discussions with the trade unions and employers. It is crass incompetence that, having introduced the Bill to the House, the Minister indicated on Second Reading that it was all a mistake and that perhaps we should not debate the Clause, after all.

However, like many of her right hon. and hon. Friends, she is mistaken. The purpose of a Second Reading debate is to discuss the principles of a Bill, and we have never liked the principles lying behind the Clause. I think that the right hon. Lady has become rather worried about the administration of her Department. I read in The Guardian that she has referred to the Ombudsman one of her own decisions on the ground that it was unjust and that maladministration has taken place—

The Temporary Chairman (Mr. Victor Yates)

Order. I do not think that the hon. Member is confining himself strictly to the Clause. What he is now saying is outside it.

Lord Balniel

I am confining myself very closely to the Clause—[HON. MEMBERS: "Order."] I am confining myself to discussing the reasons why the Clause was introduced and whether or not it should now be withdrawn. If you listen to my words, Mr. Yates— [HON. MEMBERS: "Order."]—you will find that I am completely in order.

The Temporary Chairman

Order. I am listening carefully to the noble lord. He is referring to matters which are outside the ambit of the Clause. I must ask him to confine his remarks to the Clause. Either he is for it or he is against it.

Lord Balniel

I will confine my remarks to the Clause. I felt it to be my duty to recall the history lying behind its introduction. The Clause is the basis and very heart of the Government's financing of family allowances.

In his Budget statement, the Chancellor of the Exchequer said: We propose to meet the net cost of this further increase by a small change in National Insurance benefits. He went on: We propose to discontinue the payment for the first three days of sickness, injury or unemployment which is at present made after a period off work has lasted for a fortnight." —[OFFICIAL REPORT, 19th March, 1968; Vol. 760,c. 266.] My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), immediately debating the cutting of the first three waiting days of sickness benefit, said: The method the Chancellor has adopted is bad from every conceivable point of view." —[OFFICIAL REPORT, 20th March, 1968; Vol. 761,c. 438.] But, of course, the Government plunged on, paying no attention to the advice that we gave. They had no consultations with the trade unions and employers, and the Minister threw herself into preparing this Clause which she now seeks to withdraw.

The Clause was designed to raise the sum of £17½ million by cutting sickness benefit and unemployment benefit. That money was to be used to finance family allowances. Now the Minister asks to withdraw the Clause, which I welcome, but there are a number of questions which she must answer.

The first is: what was the sociological thinking behind the Government's belief that efforts to eliminate child poverty should be financed by cutting insurance benefits available to the sick and the unemployed? The second is: why was this proposal introduced without discussions with the trade unions and employers? The third is: what are the reasons which have led the Government to change their minds? During Second Reading, the Minister asked me to "avoid any elaborate comment" on the Clause until we had reached the Committee stage. But it is treating the House with scant respect for the Minister to introduce legislation which she hopes will not be discussed because she already knows that she will withdraw it at a later stage.

The fourth question is: how are they to find the £17½ million which was to be raised by the Clause? Will it be found by other cuts in the National Insurance Scheme, or will it be found by making reductions in expenditure in the Ministry of Social Security by other means? Alternatively, is it planned to increase general taxation which, in any case, is to go up by over £900 million this year? Is a further increase planned to finance family allowances? I suspect strongly that the Government have not the faintest idea how the family allowances are to be financed. Their whole record in this matter is one of bungling and, to use the words of one of their supporters, it is a record of "fumble, fiddle and flap".

If the extra £17½ million is to be raised by general taxation, it will have to come from revenue out of the Finance Bill, which has already been guillotined. Can the right hon. Lady say whether it is the intention that the £17½ million is to be found out of general taxation? This is the second time in the last year that the House has debated revised proposals for family allowances without knowing how they are to be financed. The right hon. Lady will remember that last time I said that it was a constitutional impropriety. I was glad, although I disagreed with the methods, that at least we knew from this Bill where the finance was coming from.

Hon. Gentlemen opposite have been asked to swallow difficult legislation in the past week. I cannot help feeling that the withdrawal of this Clause is the milk which is helping down this difficult legislation. The Left wing must be purring like fat cats at having defeated the Minister, and the young eagles of Socialism are no doubt preening their feathers at their victory. But I think that they should be very careful about what is being planned by the Minister. They should read carefully what she said in her speech. It is widely believed in industrial circles that the Minister is not just proposing to withdraw the first three days of sickness and unemployment benefit, but that she is proposing to take out entirely from the National Insurance Scheme the first four weeks of sickness and unemployment benefit. There is an argument for doing this; indeed, I argued it on Second Reading.

Mr. James Griffiths (Llanelly)

The hon. Gentleman speaks about industrial circles. Will he be more specific about the industrial circles that he has been consulting?

Lord Balniel

The industrial circles to which the right hon. Lady referred in her speech.

Mr. Griffiths

Does that include the T.U.C.?

Lord Balniel

No, it does not.

I welcome any constructive thinking which should be given to the financing of short-term unemployment and sickness benefit, but such a change should only take place in the context of a reform of the tax system and the abolition of Selective Employment Tax. Such a proposal —I do not know whether this is true, and perhaps the right hon. Lady will confirm whether I am correct—should not be considered in the context of the increased taxation which the Government are heaping on the industry at the moment. The increased taxation of the past three and a half years on industry alone amounts to £1,500 million. This is not the context in which one should discuss the possibility of imposing the burden of financing short-term sickness benefit on the shoulders of industry, because the inevitable consequence would be a further twist in the rise in prices throughout the country.

I fear that the way in which this Clause has been handled will add to the growing disillusionment which the public has with Parliament. It is right that we should argue and differ about political philosophies and details of legislation, but it is wrong that the Government should introduce legislation with no idea of how it is to be financed. It is also wrong that the Government, having introduced legislation, should then withdraw the financial Clause and give no indication of how they are to find the money for financing the family allowance increases which are the main purpose of the Bill.

Mr. James Griffiths

I always listen with interest to the hon. Member for Hertford (Lord Balniel). He generally speaks in a very amiable and well-informed way. He is at his best when he is amiable and well-informed, but not at his best when he is not so well informed, although amiable, as we instanced this afternoon.

I congratulate my right hon. Friend on the decision to ask the Committee to remove this Clause from the Bill. I thought that it was a blot on the Bill. In the Budget debate I indicated to my right hon. Friend the Chancellor of the Exchequer that he ought to have second thoughts about it.

As one with experience of these matters, I beg my right hon. and hon. Friends not to mess up family allowances with National Insurance. Though I may be old-fashioned, I beg my right hon. Friend not to mess up family allowance and industrial wages negotiations. I say this because of past history. I was one of the few trade unionists, who, before 1945, was in favour of a system of family allowances paid by the State as a form of endowment of motherhood, not as a method of dealing with the problem of the lower-paid workers. That cannot be dealt with by social insurance. If Parliament is to deal with that problem, there is a better way to do it, namely, to enact a Minimum Wage Act. However, I will not go into that now, because I shall be out of order.

I am glad that my right hon. Friend has decided to withdraw the Clause. It is a very poor father who does not fight for his offspring, and I was the father of this idea.

The hon. Member for Hertford did not make any reference to the Industrial Injuries Act, 1946, in which this Clause first appeared. This is what the controversy is about. Long before we had an insurance scheme for sickness and unemployment, we had the old Workmen's Compensation Act and the Industrial Injuries Act succeeded that. Under the old Workmen's Compensation Act, there was no payment of compensation for the first three days of disability arising from an accident or an industrial disease until the disability had lasted 24 days. That was the position before the 1946 Industrial Injuries Act.

There was a strong argument that, for the purpose of the Industrial Injuries Act, benefits should be paid for every single day. The only argument against that was one of administrative difficulty. There is no reason why a workman who is disabled by accident in the service of his employer should not get compensation for one day. The whole problem was one of administration in handling perhaps thousands of claims for one day's benefit. I sought a way out of the difficulty by introducing a Clause similar to this one. The only alternative that I would accept would be for every single day to be paid. I accepted that argument then and I accept it now.

There is no argument in principle against tie abolition of the three waiting days, but what my colleagues and I understand by the abolition of the three waiting days is that there will be payments for every single day. That is what we understand, and I cannot argue against that in principle. My right hon. Friend and the hon. Member for Hertford are really at one on this matter. It could have been carried without debate.

I am glad that my right hon. Friend is discussing the whole problem with the T.U.C. and the C.B.I. I hope that out of those discussions will come something better than this. All I can say to my right hon. Friend, speaking for myself, is that the only alteration in this problem of waiting days which I would accept would be one making it possible for payment to be made for every single day lost through sickness, unemployment and particularly industrial injury.

I would tell the noble Lord, who spoke of there being no consultation with the T.U.C, that I raised this question with them and with the employers. I believe that in this matter my right hon. Friend and the Government have consultations with Members on their own side and there is nothing against that. That is done by other Governments, too, except that when we consult both sides of industry we usually go first to the sides separately; and when we think of industrial circles we begin with the T.U.C. and then we think of the other side. That is the difference between us.

I have listened to members of my own party in the trade union movement. I have a great deal of experience of this and I would tell my right hon. Friend that by asking that this Clause be deleted she has brought a good deal of comfort and satisfaction to all on this side of the Committee.

Mr. Tapsell

The right hon. Gentleman the Member for Llanelly (Mr. James Griffiths) speaks with unequalled authority on these subjects in the House because he was the Minister responsible for piloting through the House the National Insurance Act, 1946, which is the real basis of the whole of our current Welfare State; and he will always enjoy a very important place in our social history for that fact apart from his many other great services to this House. I though that that made all the more important one particular sentence, which, if I got it right, was his appeal, "Do not mess up family allowances with National Insurance."

I do not think that the right hon. Gentleman was in his place at the beginning of our debate this afternoon, but, of course, that was precisely the point we have been discussing for some hours; and, as I understood it, all the right hon. Gentleman's hon. and right hon. Friends on the other side of the House, speaking with very much less knowledge and experience of these matters than he does, took a precisely opposite view.

They are advocating that we should mess up family allowances with National Insurance. Indeed, the sub-title of the Bill might be, "The messing up of family allowances with National Insurance". I am not sure whether there are to be any more Divisions on the Bill, but if there are I hope to have the very great pleasure of going through the same Division Lobby as the right hon. Gentleman.

We first heard about this Clause, which is now to be withdrawn, when it was announced as a Government intention by the right hon. Gentleman the Chancellor of the Exchequer in his Budget speech. He described it as the conversion of the Labour Party to "civilised selectivity". Even at that time, and in all subsequent discussions, I have been unable to see what was particularly civilised about a form of selectivity which took away from the sick and the unemployed the National Insurance benefit for the first three days, which they had enjoyed ever since the right hon. Gentleman introduced it. Nor, as we said earlier, could one see why it was a civilised form of selectivity to give an increased overall social welfare benefit to all families not paying the full standard rate of Income Tax except the unemployed, the sick or the widow with dependent children. Where the "civilised selectivity" came into this whole package, I do not know.

The hon. Gentleman the Parliamentary Secretary, in our previous debate this afternoon, said he could not understand why the Conservative Party, which had always argued in favour of a more selective approach to the social services, was now being critical, I will tell him that we have always favoured a form of genuinely civilised selectivity.

The Temporary Chairman

The hon. Gentleman is going wide of the Clause. Will he please confine himself to the Clause?

Mr. Tapsell

I warmly welcome the belated decision of the Government to withdraw this Clause, a course of action which was urged on them immediately it was announced by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). In opening the Budget debate he showed that the mere announcement of the proposal embodied in this Clause revealed what a great deal of thinking right hon. and hon. Members opposite would have to do to work out a form of civilised selectivity. I also express the hope that having made such a complete muddle of their first attempt at selectivity they would give a great deal of further thought to the matter before introducing their next one.

Mr. Pardoe

One thing I admire about the noble Lord is the way in which he manages to bring the same depth of sincerity into a discussion of the plight of old-age pensioners as to one on the crass incompetence of the Government. I admire the same quiver of quiet passion that comes into his voice. "C'est magnifique, mais ce n'est pas la guerre". The noble Lord himself has done enough knocking of the Government this afternoon, I think.

I would like to congratulate the right hon. Lady on carrying out a very invidious task, but although it would not be in order this could almost be described as a debate on the inefficiency of government, not of the Government but of government, of government machinery; because although it is, I suppose, rightly democratic to attack the Government for this extraordinary piece of what the noble Lord has called "crass incompetence" I wonder what kind of advice the Government are getting that allows them to get into this kind of mess—for it is an administrative mess. I believe, therefore, that when we are confronted with this kind of withdrawal we ought to ask questions about the whole quality of the governmental machine. I would not be in order in developing that.

The Temporary Chairman

The hon. Member cannot discuss the whole policy outside this Clause. Will he please confine his remarks to the Clause?

Mr. Pardoe

I was about to say that I did not intend to pursue that particular point and I will not do so.

I would have supported this Clause and when I first saw it in the Bill I had some feelings that way about it. I would have supported it if it had been an attempt to put the responsibility for paying for the benefits for these three days on to the employers. That is what I would like to see done. I hope the right hon. Lady will do it and I would not mind if she did it for the whole four weeks. I would like to see far more put on the shoulders of the employers because this Clause and the decisions behind its withdrawal raise fundamental questions about the increase in sickness absenteeism which we have seen and which has been shown to us through the medium of various reports by the Government Actuary, particularly the last one, where the trend was confirmed.

Perhaps we should consider that. In circumstances like this, there may be a case for introducing some kind of "no claim" bonus for employers. We ought to rate them according to their sickness record and sickness absenteeism and perhaps according to their withdrawals on industrial injuries and, though it does not come within the scope of this Bill, withdrawals on redundancy fund payments. I hope that we shall progress in these things in the future. I certainly congratulate the right hon. Lady on withdrawing the Clause as it stands because, unfortunately, it did not do what I at first hoped it would; and I fully support its withdrawal.

Mrs. Hart

I am sorry that the noble Lord has found it necessary to get so heated. Both he and his hon. Friends have suffered a little by the example that they were set by one of their hon. Friends earlier in the afternoon.

I will move straight to one point of total conflict between the noble Lord and the hon. Member for Chelsea (Mr. Worsley). The noble Lord asked me, "How will family allowances be paid for if the saving that is supposed to come from the abolition of waiting days is not to be made?" The hon. Member for Chelsea assured us that the whole of the family allowances increase to benefit the poor was being paid by the richer taxpayers. He was quite wrong. Those were two completely conflicting arguments and, if I may use an adjective of the kind which have been flying around this Chamber, they display the crass misunderstanding of both hon. Members of the way in which family allowances are related to the National Insurance Fund.

I know that the noble Lord has great difficulty in understanding this point. I do not want to seem either school-marmish or arrogant—both of which the two hon. Members have occasionally accused me of being. I know that the noble Lord finds it difficult to understand the relationship between other forms of public expenditure and expenditure from the National Insurance Fund.

Family allowances are financed out of general taxation. If I understood the hon. Member for Chelsea correctly, he was saying that family allowances were to be paid for by other taxpayers with families. This is absolute nonsense. The give-and-take adjustment of family allowances is made simply to ensure that the value of the increase is not kept by people above a certain income level. Increases in family allowances, in general, are financed out of general taxation. Therefore the Finance Bill accommodates them. Under this Clause there would have been a saving to the National Insurance Fund.

I assure the noble Lord that he need not concern himself so deeply and with such sincere agony on behalf of the Government about the way in which they will meet any financial problem caused by dropping Clause 2. There will not be a problem. There need be no uneasiness on the noble Lord's part about that.

Lord Balniel

The right hon. Lady will agree that the reduction in the allowances in the Finance Bill has been hypothecated to the financing of these family allowances. Is there to be an increase in those allowances?

Mrs. Hart

The noble Lord has misunderstood the position. The offsets of the give-and-take arrangements provided for in the Finance Bill are not concerned with raising money to pay for the increased family allowances; they are concerned with ensuring that the full value of the family allowance increase is kept only by those with an income above a certain level. This is the method of selectivity that the Government are using. The result of ensuring that the full value of the increase in family allowances is not kept by the better off is not the means by which we finance family allowances in the Bill. All that we do is to ensure that no value is kept.

It is the general taxation provided for in the Budget and the Finance Bill that supports this family allowance payment and other family allowance payments. There is a difference in the public expenditure involved here as compared with expenditure on the National Insurance Fund. There is a difference between this public expenditure and public expenditure as provided for in the Estimates and covered by the Finance Bill.

The noble Lord asked about timing, and why I had had so little to say about this matter in the Second Reading debate, when I knew that I was going to withdraw the Clause. He will know that the requirement of Budget secrecy applies to statements made on Budget day. Indeed, he himself drew the attention of the House to the fact that the announcements about both the family allowance increase and the waiting days provision were made in the Budget statement. Because of the Budget secrecy surrounding that debate it was not possible, before Budget day, for me or for the Lord President of the Council—who is also deeply involved— to begin our consultations with both sides of industry. Having begun preliminary discussions, by the time we reached the Second Reading debate we had reached certain conclusions, which I have tried to explain this afternoon. Some of my hon. Friends read between the lines of what I said in the Second Reading debate, if the noble Lord did not.

We had to look at this provision in the context of the employers' arrangements for sick pay cover. That is the effect of the statement I made at that time, although I might have used different words. Anybody reading between the lines of what I said would know what I meant.

I would utter a serious note of warning to the noble Lord in connection with these confidential discussions. If he believes that he serves the best interests of those in industry by openly discussing in the House anything that he may have heard about the confidential discussions going on between the Government and industry he is very wrong. I shall not say more about that except that, from the point of view of what I should have thought he would hope to be successful discussions, he should be cautious.

We have begun discussions with the C.B.I, and the T.U.C., and it is clear that the matter will best be considered in conjunction with some other aspects of the wage-related scheme about which a White Paper will be produced before the end of the year. In our discussions we are now engaged on many of the aspects of the scheme. It is clear that this facet of the discussions needs to be considered carefully. It is equally clear that we cannot expect to take immediate steps in this matter, and that if we had gone ahead and withdrawn State cover for waiting days there would have been a long gap before we could have gone further.

Mr. James Griffiths

I hope that in the discussions which my right hon. Friend has mentioned she will not get back to the Workmen's Compensation Act, even for a month.

Mrs. Hart

There is no intention of doing that, but we cannot discuss the kind of basis on which we are setting forth in these discussions because they are confidential, and need to remain so for some time. This is the context of the situation, and this is why it is now clear that the right thing to do is to withdraw the Clause; that the right thing to do is to continue our discussions with both sides of industry and to see what we can work out together, in co-operation, taking into account all the factors mentioned by the noble Lord.

In this way we shall not run any danger of subjecting any workers—even the poorest-paid, and however small a minority they may be—to the risk of suffering while the new scheme is being worked out. This therefore seems entirely correct. I am delighted that my hon. Friends agree with me and that the noble Lord not only agrees, but has put his name to the Amendment to delete Clause 2.

Mr. Worsley

The right hon. Lady mentioned me and it is only right that I should reply. She is very free with accusations that other hon. Members do not understand things, but even those without the support of large numbers of civil servants can sometimes get things right. We understand this proposition for financing these family allowances, and that not the whole cost will fall on the selective increases. It is clear from the Budget statement that, although some will be borne in this way, the net cost was intended to be met by the three day sickness provisions of Clause 2—

Mr. Loughlin

The hon. Member does not understand.

Mr. Worsley

The hon. Gentleman should not continue with what is becoming a parrot cry.

The right hon. Lady made a serious mistake to come to the House on Second Reading knowing what she did. She apparently knew then that she intended to withdraw this Clause—

Mrs. Hart

No, let me correct the hon. Gentleman, because he is wrong. What I said was that, at the time of the Budget announcement of the family allowance increase and the waiting days provision, we had not embarked on our discussion with the C.B.I, and the T.U.C. because of the need for Budget secrecy. Between then and Second Reading I had not yet met them, but we had exchanged correspondence and I had taken one or two soundings, but we did not begin the actual discussions until after the Second Reading debate.

Mr. Worsley

I am grateful for that clarification, but the right hon. Lady said that these "soundings"—she is now drawing a distinction, which I accept, and what she said on Second Reading now forms a clear pattern—had already made here aware that she was likely to withdraw this Clause—

Mrs. Hart indicated dissent.

Mr. Worsley

I think so, because no other conclusion fits what she said on Second Reading. She told my noble Friend that, in his own interests, he should not discuss the matter. The Government should not bring Bills to the House in this way. The correct action for them, faced with a situation which could face any Government, would have been to withdraw the Bill until they had had these discussions. This is not the sort of Bill which would be held up for a long time; the Government knew that they would get it. On the new principle embodied in the Bill—there is only one, because the other is not new—the correct action would have been to withdraw the Bill before Second Reading and continue the discussions to the point at which they could take a firm decision and then brought an amended Bill to the House. A mistake was made as part of the muddle which my noble Friend has described. Nevertheless, the Government have seen the light, and we support them.

Question put and negatived.

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