REDUCTION OF REBAT

HC Deb 11 February 1969 vol 777 cc1137-80

4.6 p.m.

Mr. Nicholas Scott (Paddington, South)

I beg to move Amendment No. 1, in page 1, line 10, leave out "three-quarters of one week's" and insert "0.9 of one week's".

The Deputy Chairman (Mr. Harry Gourlay)

I think that it will be convenient if, with that Amendment, we discuss Amendment No. 2, in page 1, line 10, leave out "one-half" and insert "0/"; Amendment No. 3, in line 11, leave out "one-quarter" and insert "0/"; and Amendment No. 6, in line 13, leave out "one half" and insert "0/".

Mr. Scott

Thank you, Mr. Gourlay.

All the Amendments have the same principle behind them. First, they express the rebate to be paid under the Bill as a decimal. Secondly they increase the percentage proposed by the Government. The first point is not an important one, but we felt that as the Government were committed to a programme for the decimalisation of our currency, and as they had announced a system for the adoption of metric weights and measures, the time was approaching for the Government, when introducing legislation, to cease to use fractions, and to begin to use decimals, or at least to use percentages. We have, therefore, expressed the proportion of payment which should be repayed as rebate as a decimal, and perhaps it is not inappropriate to mention that the Department of Employment and Productivity might be asked to give a lead on this matter.

The main argument contained in these four Amendments is much more serious and fundamental. The Amendments will alter the proposed relationship of rebate to payments. The Government propose to alter it downwards, from two thirds to one half. Our proposal is that, for a variety of reasons, 60 per cent. will be very much more appropriate.

Both sides of the House have accepted the reasons for continuing with a scheme on the lines outlined in the Bill. It is accepted that there are two sides to the case—first, a social reason, and secondly, an economic reason. The social reason is that it eases the burden on a man who loses his job and has to seek employment elsewhere. The economic reason is that it encourages the mobility of labour.

Neither the Government proposals, nor the Amendments, affect the social aim in any way. A person who loses his job will continue to receive the same payment under the new scheme as under the old, but, on the economic side, we believe that the mobility of labour is bound to be adversely affected by the Government proposals, and we seek in some way to mitigate their impact.

If the Government argue, as they have, that the scheme has made a considerable contribution to the mobility of labour; if they argue that not only does it make more bearable the effects of the higher rate of unemployment we have suffered under the present Government, but that they have contributed to a higher level of unemployment because work people are more prepared to move, and employers are more prepared to declare work people redundant; they must accept that the alterations they have proposed in the Bill will reduce the amount of good the scheme can achieve.

The Economist in its description of the Government's proposals, described the payment that an employer must make when he declares somebody redundant as a fine on that employer when the redundancy is declared. One does not have to accept that language to accept the idea that the employer is being asked to bear a burden at the point when he is probably least able to bear it, when he is being forced to declare people redundant. By the Bill the Government are increasing the burden—or, if one uses the Economist's language, the fine—levied on the employer at that time. It may be necessary. To maintain the solvency of the Fund, perhaps some increased burden on employers is unavoidable, but the Government are seeking to do rather more than that, and this is really our quarrel with them.

In the Explanatory and Financial Memorandum to the Bill they estimate that it will … reduce the annual level of expenditure from the Redundancy Fund by rather more than £17 million, that is by about one-third; and that the effect will be to reduce the annual rate of expenditure to about £9 million below income, thus enabling the Fund to begin repayment of its borrowing from the National Loans Fund at this rate. That is what we quarrel about, and what we seek to rectify in the Amendments.

We believe that the Government are seeking to repay much too quickly the debts which have been incurred by the Redundancy Fund to the National Loans Fund, and that it would be much better to seek to fix a level of rebate which would stabilise the Fund at its present level of indebtedness; perhaps to have a trickle of money back into the National Loans Fund, but certainly not to aim at a rate of repayment with about half the reduction in expenditure being used to repay past debts to the National Loans Fund.

Our figures are only estimates of what is likely to achieve this stabilisation. The Government's past estimates on the Fund have been wildly wide of the mark. Our quarrel with them here is not that their estimates are wrong, but that their starting point is wrong. They are aiming to repay £9 million a year into the Fund, and this is placing an excessive burden on employers and making necessary a very large reduction in the rebate which will become payable under the Bill. We prefer to propose a slightly higher level of rebate to continue and to accept a slower rate of repayment into the Fund.

There are four reasons why I hope that the Government might be prepared to have second thoughts on the matter. First, the Government have always told us that this is a Fund which belongs to industry. The C.B.I., which represents the side of industry on which the burden of redundancy payments fall, has made clear its disagreement with the Government's proposals. When it entered into the scheme, it did so on the basis of a given level of payments and a given level of rebates.

Now the Government seek unilaterally to alter the rebate, not only to keep the Fund solvent, but also very quickly to repay past indebtedness. We believe that there would be a much better chance of keeping this as an agreed scheme within industry if the Government were prepared to show that they simply wanted the minimum alteration so as to maintain the solvency of the scheme and get by.

4.15 p.m.

Secondly, if we accept the economic aim of a redundancy Bill, we need to keep to the minimum any disincentives to employers to declare redundancies.

Thirdly, the reduction of the rebate will bear most heavily on the small employers, the small firms. There is another Amendment on that subject, but it is relevant to the present group of Amendments that we are discussing. We believe that there is a case, if we accept that some increased burden must be accepted, for keeping it to the minimum, particularly in view of its impact on the small employer.

Fourthly, we believe that it is wrong to impose repayment of indebtedness at the rate envisaged by the Government until we have had the review of the scheme which the Under-Secretary of State promised on 30th January—first, a review of the anomalies which continue to exist in it, and, second, a more fundamental review of how redundancy payments schemes fit into other policies to achieve mobility of labour—and that we should not commit ourselves to anything like this level of repayment until we have had a much more fundamental look at the whole future of redundancy payments.

I therefore hope that the Government will be prepared to look at the level of rebate, and perhaps to modify it, so that the scheme is stabilised at its present position, and to remove the burden of the duty to repay money into the National Loans Fund at the rate envisaged in the Explanatory and Financial Memorandum.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I support the Amendments which, if anything, are very modest and do not go quite as far as they should. I should have liked to see a shade more of the money for redundancy payments coming from the Fund and a shade less as the direct responsibility of the employers. The Amendments would result in 60 per cent. of the payments coming from the Fund, whereas the Government propose that 50 per cent. should come from it. We could perhaps talk in terms of the small increase from 50 to 60 per cent. being the difference between the two sides in the debate.

We have met the Under-Secretary of State's argument in one respect. The system before the Bill was introduced had the effect of almost encouraging employers to dispense with the services of older workers first, and we all agree that that is most undesirable. The Minister therefore proposes that the rate of rebate should be the same for the over-41s and under-4ls at 50 per cent. of the total cost. Our Amendments do not depart from that, because we believe that it should be 60 per cent. in each case, therefore carrying into effect his principle.

When one considers the share that would have to be paid by the employer, one sees that with our Amendments it would cost the employer slightly more to dispense with older workers than with younger people, because he would have to pay 0.6 per cent. of a week's pay for each year's employment if the man was over 41, and 0.4 per cent. if the man was under that age. Therefore, we have a built-in incentive to do what everybody would agree is the right thing to do, and to concentrate any unavoidable redundancy on the youngest members of the work force rather than the older. On that point, therefore, the argument is met.

But the powerful reason why the Amendments are right and why I hope the Minister will accept them is that the economic point of redundancy payments, as opposed to the social point, is to shift the emphasis on to industry as a whole in meeting redundancy payments. Quite clearly, if the employers have to meet too high a proportion directly, it will be a disincentive to declaring redundancies which should be declared in the interests of nationalisation, technological progress, and so on.

There are two completely separate sets of circumstances where this would apply. First, in the ordinary course of meeting the productivity and efficiency of a business or a factory, the incentive will be reinforced if the cost of redundancy pay does not come all the time from the employer's pocket but a higher proportion of it comes from the Fund. Secondly, and more important, in the case of a declining industry—an industry which, whatever it does, has to dispose of and shed labour—it is even more important that it should not be asked to find too great a proportion of the cost of redundancy payment which is paid out. This aggravates the difficulties of its decline and it is less easy to make an orderly and solvent decline as it contracts. The principle in the original Bill, therefore, that the greater proportion of redundancy pay should come from the Fund, i.e., from the whole of industry, is an absolutely right one.

The argument was very strongly reinforced in an article in the Economist which put it in very much stronger terms than I have been using. This is the fundamental economic reason why it is right to take a much greater proportion from the Fund than the proportion which the employer finds directly from his own pocket. To reduce it as low as 50 per cent. which the Government are proposing in the Bill is going far too low. I would prefer to see it higher still and see the proportion of the Fund in the region of 75 per cent. But, for the sake of harmony on these benches, I am pleased to support the compromise of 60 per cent. which my hon. Friend moved from the Front Bench.

It is implicit in what I have been saying that this would mean an increase in the weekly contribution of employers. I am prepared to face up to that. It is much more desirable that the increased costs—and, after all, we are talking about meeting an increased cost—should come from the employers directly on the redundancy levy rather than from the employers directly in terms of pay for each redundancy. I accept that the consequence of what I am saying means slightly increased contributions, but I believe that we are on the right lines here in pressing to reduce the share directly for the employer and increase the share which comes from the Fund.

The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley)

Those of us who pay proper respect to parliamentary democracy ought to acknowledge Parliament's indebtedness to the Economist for the criticism it made of this Bill. Until that journal published its remarkable article nearly a fortnight ago none of the arguments which hon. Gentlemen opposite have offered in terms of the principle of the Bill were heard in this House. The hon. Gentleman will forgive me for wondering how the debate would have gone a week ago, or would have gone today, had the Economist not chosen to draw the distinction between what it thought the Government should be doing and what, in fact, the Government are doing.

The Economist brought to light in its article the principle which both characterises the Bill and this debate on the first Amendment to the Bill. It concerns how much of the cost of redundancy should be borne by individual companies at the point of making their employees redundant and how much of the cost should be shared by industry as a whole.

I disagree with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who said that the whole point of redundancy payments was to shift the cost of redundancy from individual firms to industry as a whole. The point of the redundancy payments scheme is to provide a payment at the point of redundancy. It has a social and an economic objective, but the object is to make that payment possible.

A second object of the parent Bill—which we are perhaps only vicariously discussing this afternoon, but discussing, nevertheless—is to make some arrangements whereby the cost of that redundancy payment is shared to a greater or a lesser degree between industry.

The hon. Member for Paddington, South (Mr. Scott), who moved the Amendment said that one of the objects of the Bill and of the scheme, and one of the objects which he hoped was still achieved by his Amendment, was the improvement of the levels of mobility of labour. I concede that his Amendment, no more than our amending Bill, changes the willingness of individual men to become redundant and move to expanding industries and more productive jobs. But he has to understand, when considering our attitude to this Amendment, that one of the objects of the Bill is not only to preserve the willingness of individual employees to accept redundancy when it comes and to agree willingly to a change of industry, but is also to make individual employers think more carefully about the type of person they make redundant and the occasion of that redundancy.

This must be borne very clearly in mind when we consider the appropriate level of rebate—50 or 60 per cent. Equally, it is important to bear in mind exactly the extra liability which we are placing on industry if we ask them to accept a rebate of 50 per cent. rather than 66⅔ per cent. The average redundancy paid during the second half of 1968 amounted to £245. That is the amount paid in gross to the individual redundant worker. The average rebate contributed by the Fund to the employer who made that individual worker redundant was about 75 per cent. That is allowing for those in the total who got large rebates because their employees were 41 or over and those who got rather smaller rebates because they were under that age.

That means what we are asking today, comparing that level of rebate with what we now propose, is that the employer's share of each average redundancy payment should be increased from about £60 to about £120. After necessary and appropriate deductions for Corporation Tax, we are saying that the employer's share should be increased from £35 to £70—not anything like as substantial an increase as some of the critics of our proposals have suggested. It is very important that we should bear that in mind when we consider how great or how small the rebate from the Fund should be.

It is also important to bear in mind the nature of the intention of the Fund. The Fund is intended, in part, to share the cost of redundancy amongst industry as a whole. It was certainly intended to ensure that industry, as a whole, was responsible for the cost of redundancy. It was never the Government's intention that the existence of that Fund should result in the Government, and therefore the taxpayer, carrying for a substantial period the cost of redundancy payments.

For over two years the Fund has been in deficit. I put it to the Committee that the logic of the Fund—and certainly the logic of the sort of financial prudence which hon. Gentlemen opposite have urged on us—is that this element should no longer be properly charged to public borrowing, but should return, as intended, to be the liability of industry as a whole. For, while the deficit on the Fund is borrowing in virtually every sense, it represents public expenditure. Certainly, in the sense that it increases the amount of money available in an artificial way, it is inflationary.

[Mr. BRYANT GODMAN IRVINE in the Chair]

4.30 p.m.

Hon. Gentlemen opposite who have urged us to cut public expenditure now as a necessary and natural economic measure would not wish us to inflate the Fund by Government lending. They want it to be financed by industry. When we consider the appropriate level of rebate, we must bear in mind the fact that the principle, intention and purpose of the Fund—and certainly the economic objects which, I suspect, all hon. Members share—are best served by ensuring that public lending to meet the deficit of the Fund should be extinguished at the first opportunity. We believe that the first opportunity is best achieved by a reduction of the rebate from 66⅔ to 50 per cent.

I concede immediately that it is not easy to conjure up a figure. One might suggest 50, 55, or 60 per cent. as an automatic and absolute figure which has virtues and which one can demonstrate is right in terms of logic. Any figure which one might choose is bound in part to be arbitrary and can be supported by arguments which are, in a sense, only partial. The figure of 50 per cent. was arrived at because we anticipate that to meet the outgoings from the Fund next year we will need a saving on the Fund's expenditure of between £8 and £9 million.

Equally, we anticipate that the extra savings which will accrue from a reduction of rebate to 50 per cent. will produce, in addition to this £8 million, a further £8 to £9 million which can be used to liquidate the deficit of the Fund. It seems only right to us that not only should the outgoings be preserved, but that the Fund's deficit should be liquidated at some speed.

It also seems right to us that if we anticipate a need to make savings of rather more than £8 million next year, the total saving of £10 million—which is all the saving that a rebate of 60 per cent. would produce—is far too near the margin to be prudent. I concede without hesitation that it is far too near the margin to be recommended by hon. Members who—they are to be found on both sides—miscalculated the possible expenditure from the Fund and who are now determined to ensure that the Fund is in regular and permanent solvency.

I argued on Second Reading that there was a theoretical case for making sure that the income to the Fund, the levy, was so large as to meet all eventualities, no matter how inaccurate the calculations might be. I tried to refute that argument by saying that a large levy, though covering every contingency, might become an excessive charge on industry because it would be reflected by a surplus in the Fund. This criticism is not appropriate to the proposal that the rebate should be reduced from 66⅔ to 50 per cent., for these reasons.

If we had been so cautious as to over-calculate the levy, and if the total number of redundancies had been substantially fewer than we anticipated, the result would have been that the levy would have proved larger than we needed and there would have been a surplus on the Fund, drained out of industry and used for no immediate purpose. If, on the other hand, because of a fall in the number of redundancies the savings from a reduced rebate are greater than we anticipated, then the savings are entirely to the benefit of industry which will never have had to make its 50 per cent. contribution to the rebate.

If, therefore, we are estimating over-cautiously, this caution reflects not only to the solvency of the Fund, but to industry as a whole. By using the phrase "industry as a whole" I refer in this context to industry, globally; the whole of industry which, in part, makes redundancy payments to the Fund and which, in part, makes contributions to individual redundancy payments.

In other words, I am saying that if we are to preserve the solvency of the Fund, we need more than a £10 million additional saving which a general rebate of 60 per cent. would produce. I am therefore also saying that by increasing the individual company's indebtness to 50 per cent. and reducing the rebate to 50 per cent. we are achieving three objectives. The first is to secure and preserve the Fund's solvency in the coming year. The second is to pay off the deficit in the Fund, which operates against our economic objectives and which is contrary to the objects of the Scheme. The third is to make sure that if we have over-estimated and have been more cautious than we need have been, the beneficiary is not the Fund, preserving a large surplus, but the companies which are not actually paying the 50 per cent. rebate.

I come to the suggestion that this charge should not be made to individual companies until two points have been answered from the Second Reading debate. It was said that we should ask for the minimum to keep the Fund in balance until, first, the anomalies to which reference has been made have been examined and rectified and, secondly, until we have decided how the Fund fits into our general industrial strategy.

If hon. Gentlemen opposite want the very minimum to keep the Fund in balance, a 60 per cent. rebate would not do it. It would have to be smaller than that. However, leaving that point aside, the Government are entitled to ask for this adjustment before the two objectives which have been mentioned from the benches opposite are met. We are entitled to ask for this adjustment because, as I have made clear, while any anomalies may need to be rectified in terms of equity, it is wrong to imply that the outgoings from the Fund are substantially changed by the existence of those anomalies. The Government wants to rectify them not because they are a genuine and material drain on the Fund—to confuse the anomalies with the Fund's outgoings is to misunderstand the need to change them—but simply to achieve equity.

We were then asked to postpone anything but minimal changes until the Government knew exactly how the scheme fitted into their general strategy. The Government believe that they know how the scheme fits into their general strategy. We believe that we can demonstrate that many of the changes which have operated in the last four years—the willingness of men to leave contracting industries and move into expanding industries, their willingness to leave old trades and enter new professions and their willingness to undergo periods of retraining at less earnings than they enjoyed during their previous working lives—have been helped by the scheme.

That is why we would not choose to change the individual payments made to individual redundant workers. It is also why, on a simple actuarial calculation, we believe that the rebate must be 50 per cent. if our two overriding principles are to be preserved. They are, first, that the Fund should be put into balance without a general increase in industrial costs, which would come about from an increase in the levy, and, secondly, that it is appropriate and right that a larger share of the responsibility for individual redundancies should be borne by the firms which make the men redundant rather than by industry as a whole.

In the light of these principles, I ask my right hon. and hon. Friends to reject the Amendment.

Colonel Sir Harwood Harrison (Eye)

The Under-Secretary stressed that the extra cost to firms concerned is recovered in respect of Corporation Tax. He made the point as if it applied to everyone, but I do not think that that is technically right. Perhaps the hon. Gentleman will say what percentage of workers are not employed by those firms?

Mr. Hattersley The figures I quoted were for Corporation Tax, but they apply entirely to individuals who employ and eventually make individual employees redundant if they pay Income Tax at or about the same rate. The area of doubt concerns companies which are making employees redundant because of inability to make profits.

The figures I quoted are more or less correct. The hon. and gallant Member is absolutely right to draw our attention to this matter. If one is considering the issue of a non-profit-making company one has to decide whether it should be subsidised as against a firm which is making profits. I suspect that the hon. and gallant Member does not want that to happen; neither do I.

Mr. James Dempsey (Coatbridge and Airdrie)

My hon. Friend the Under-Secretary takes the view that firms should accept their due and proper share of the cost of redundancy. He rightly argues that the Government levy should be pegged at 50 per cent. It is contended that this would help to offset the deficit on the Redundancy Fund in general.

Will my hon. Friend deal with the question of who is responsible for these payments when a firm becomes bankrupt? I have had a most regrettable experience of a firm going bankrupt and laying off 140 workers with neither holiday pay nor anything else to make a contribution to the Fund. I understand that in this case the redundancy is paid solely from the Fund. That is bound to create a deficit in the Fund because the firm is unable to pay its part of the redundancy contribution. Very much to my surprise, when I investigated the matter more fully I discovered that there are only a small number of bankruptcies in a year and very few firms which make no contribution whatever.

Will my hon. Friend explain, in such circumstances, where the money comes from? Who is responsible, directly or indirectly, for meeting the cost of those redundancy payments? This is bound to have an effect on the Fund, and in all probability some effect on the Government contribution. If so, it surely means that if the Government contribution is pegged it should be much more than 50 per cent. as the Government would have to meet the share which should be contributed by a firm which goes bankrupt.

I discussed this matter with one of my hon. Friend's colleagues and I was very surprised to hear of the number of bankruptcies which take place in the United Kingdom in a year. They must have some influence on the solvency of the Fund. There are bound to be deficits. I am curious to ascertain how any fund can be solvent in such circumstances. I recognise that perhaps one can anticipate avoiding redundancy and have some little balance in the Fund, but I do not think that one can anticipate the bankruptcy of a firm. It is bound to have an upsetting effect on the successful administration of the Fund. Is it possible to ascertain the number of bankruptcies which affect the Fund,: the cost to the Fund, how that cost is borne, and to what extent by employers and to what extent by the Government?

It must be obvious to all that this is one of the contingencies which should be provided for in the compilation of a fund of this nature, the purpose of which is to ensure that workers receive some redundancy payment to help them over that economic stile until such times as they can find new employment.

4.45 p.m.

Mr. Kenneth Lewis (Rutland and Stamford)

I think that the Under-Secretary, in using the argument that costs to the employer are allowed against tax, was rather panning out his speech, because that is an argument one could use about anything. It can be used about S.E.T., but it does not impress a businessman, because it is the cost to industry that matters. The cost against industry of a payment of this kind, or of a tax such as S.E.T., is a charge on the goods and affects the price of the goods and the competitiveness of the industry concerned.

Although it is useful to have this debate, it is arguable whether the amount should be 50 or 60 per cent. Having pressed the Government to get this equation right at last, I would not take the argument too far, but industry is having this imposition placed upon it because the Government up to now have got their calculations wrong. Because the Government miscalculated they are having to pay out. The Under-Secretary was joyful about the prospect of a profit on the Fund, and we certainly would be joyful about that, but if the Government have got their calculations right this time and in due course there is a profit on the Fund, what will happen when the Fund does run into profit?

If the Fund is in deficit industry has to pay more out. What is to happen when it runs into profit? Is the advantage to be given to industry, and how will it be given to industry? Industry should know this in advance. Normally, industry is suspicious of Governments. It is particularly suspicious of this Government. It takes the view that when there is over-spending industry has to pay, but when it contributes towards getting a balance the Government take advantage of that balance. It would be useful if the Parliamentary Secretary could summon up courage and look ahead so that he could say what he intends to do if the change of amount set out in the Bill in due course leads to a surplus on the Fund.

As on Second Reading, the hon. Gentleman was disinclined to accept that there was very much misuse of the Redundancy Payments Scheme. I think that he is wrong. I am not sure whether he was actually serious about the inquiry which he said has been started on this matter. I do not know how quickly we shall have the results of that inquiry. There has been considerable misuse of this scheme. People have been made redundant when near to the time of their retirement so that they could get both a pension and a golden handshake. Not only do I think that this is so, but I am sure that many workpeople think it is so. In various factories one is told, "John is lucky, because he will get £1,000". This is the peak amount, which is paid at about age 62. One's informant—George—hopes that when he becomes 62 or 63 the same will happen to him.

I hope that the Minister recognises that in changing the scheme in this way because of his miscalculation he will probably affect George's prospects. George's pal Bill has already got away with a good payment, plus his pension. The employer, who must now contribute more, will say to George, "I am sorry. This will cost me more. Although your friend got the payment, we cannot pay it to you. You must struggle on until retirement, when you will get nothing".

The weakness of the scheme is that it is open to abuse. It is not really abuse. It is playing the scheme as it is drafted. The only way to abolish such abuses is to phase the scheme. I believe that there is an Amendment down which would provide that a certain amount of the capital sum which is paid should be phased over a period of months. I hope that the Minister will quickly examine the whole question of anomaly, because any scheme which is ridden with anomalies is open to suspicion by those who do not get advantage from it as against those who do. It cuts at the very root of the objectives of securing mobility of labour and giving help where there is need.

Many of the payments which have been made have not been made on the basis of need but on the basis of the advantage accruing to an employer from making a payment to an individual because it suited the employer at that time, although it had nothing to do with the individual's needs. In certain cases employers thought that payments could be justified because advantage would accrue to the employers, perhaps because they intended to re-employ the recipients, or perhaps because they had younger men coming on.

Mr. Ridley

The Under-Secretary's reply was very weak. He did not meet the economic case which I put. He simply made a few offensive remarks about hon. Gentlemen who did not raise this matter on the last occasion. The Under-Secretary should address himself to the argument instead of trying to bamboozle us with many words which added up to a very weak case.

The hon. Gentleman said, first, that there was no harm in employers being asked to pay more. The share which employers will have to pay is being doubled. The hon. Gentleman justified this on the ground that employers got much of it back in Corporation Tax. The private employer who employs people out of his own income cannot make a charge against Income Tax for redundancy payments. It will hit very hard small employers and employers who are not companies or corporations. That is one social effect which the Under-Secretary should consider.

Sir H. Harrison

I understood the Under-Secretary's reply to mean that the private employer could set this payment against his own private Income Tax.

Mr. Hattersley indicated assent.

Mr. Ridley

If he can set against his Income Tax the wages he is paying, he can obviously set this payment against Income Tax. If he cannot set against Income Tax the wages he is paying, presumably he cannot set this payment against Income Tax. I am thinking of people who employ housekeepers, cooks or other such people, and who may have to do so for perfectly good reasons. They will find this a great burden if they have to pay double their share out of their taxed income.

The Under-Secretary went on to adduce the extraordinary argument that the Fund would not come out of deficit quickly enough if the Amendment were accepted. He did not address himself to my point that if the contribution were increased the Fund would be brought out of deficit. His reason for not wanting the deficit to remain is that it would be inflationary and this would be bad for money supply. The hon. Gentleman then argued that if the contribution were increased it would be bad because it would create a pool of industry's money which was not being employed—that is, it would be deflationary. The hon. Gentleman is trying to have the argument both ways. If he complains about the Fund's being in deficit having inflationary effects, he should welcome the Fund's being in surplus having deflationary effects.

Further, the Under-Secretary must deal with the argument that we must encourage people to declare redundancies, for the very best economic reasons that we must secure a greater turn-round of labour, aid the decline of industries which should decline, and aid the rationalisation of plants that should be rationalised. This afternoon's work will have a big deterrent effect upon employers, who are sluggish enough as it is about modernising their factories and improving their manning schedules.

I believe that the case for the Amendment stands unchallenged by anything that the Under-Secretary said.

Mr. Joel Barnett (Heywood and Royton)

I want to talk not about the general situation, but about one or two anomalies. My first point concerns companies which go into liquidation, or which are in the process of doing so, or which are nearing that stage. My hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) referred to this point. If they go into liquidation, and have not sufficient funds to make their redundancy payments, the Fund must do so. It frequently happens in such cases that another company takes over the bankrupt company, in which case there is no redundancy and the same company continues in being, the company which does the taking over buying from the existing shareholders at a price which takes account of the acquired company's finances.

Another way in which it can be done is for a completely different company to be formed. It buys the business, including the tax losses which go with it. Then the old company does into liquidation and the workers do not lose their jobs but stay in the same building and work for a new company under a different name. All those workers receive redundancy pay, and I believe that this is completely against what the Act intended. I know from my professional experience that this happens, and I should be interested to know if it happens on a much grander scale and what the Minister plans to do to prevent this from happening in future.

My second point concerns a recent case which occurred in the shipbuilding industry and which went directly against the intention of the Act. In this case it was clearly in the interests of the economy, of the industry, and of the company concerned from a productivity point of view, that a worker should do a particular job. On appeal, it was held that the man was really redundant because a totally different job was being offered him. But we cannot leave it at that.

I should be interested to know what my hon. Friend proposes to do to prevent these actions, which, clearly, are directly contrary to the purposes of the Act.

5.0 p.m.

Mr. David Mitchell (Basingstoke)

If the Amendment were carried, a firm facing redundancies would not have to pay so much. If the Bill is passed without it, we shall create a growing deterrent to the firm which should be making workers available to other firms from doing so. One of the main difficultes about the country's labour problems is a shortage of labour in the right places at the right time. It is, therefore, very much to the nation's advantage that labour should not be tied up in firms where it should be made redundant and moved on.

I came across this weekend the case of two factories owned by the same company, five miles apart. One was sold to another company and the vendor asked some of its workers to work at the other factory. They agreed to do so. As a result, those who had moved, with all the problems of travelling five miles across country, with not particularly good transport, received no payment, while those who stayed doing the same job as they had done for the last 30 years suddenly found, to their absolute astonishment, that, at the end of the week, they received a great big bundle of money which they had never expected. Yet they were doing the same job, pulling the same handles and pushing the same pedals.

This was manna from heaven, the glory of this Government. But is it in the country's interest? I ask the Under-Secretary to look more closely at this matter.

Mr. Scott

Three points require a different answer from that which the Under-Secretary has so far given. First, he said that, because of the Bill, employers would have to think more carefully about redundancies, which means that the Bill's impact on mobility of labour will be diminished and it will not be so effective as it has been hitherto. The hon. Gentleman, who has been trying to have this both ways, must recognise this. By accepting our Amendments, he would mitigate the impact of the need to alter the scheme in this way.

Secondly, the hon. Gentleman said how little this would cost employers. Every time the Government bring forward an additional tax or levy, they say how little extra it will add to industry's burden, but the burden, particularly on the small firm, is becoming intolerable.

Finally, the hon. Gentleman should be reminded that the fact that the Fund is in deficit is due above all to the Government's inability to forecast the demands. Its indebtedness at the moment is their reponsibilty and it is wrong to bring forward a proposal which will not simply stabilise the Fund, but will ask industry to find money to repay past debts at the rate of £9 million a year.

Mr. Hattersley

My hon. Friend the Member for Heywood and Royton (Mr. Barnett) asked about the liabilities of the Fund to insolvent firms. I am advised that, during 1967–68, the Fund, which is directly responsible for redundancy payments to individuals made redundant but who do not receive the payment because their parent company is bankrupt, faced a total liability of £2½ million. This is a substantial sum, amounting to 7 or 8 per cent. of the total rebates to employers of £37½ million.

Mr. Barnett

How many companies?

Mr. Hattersley

That information is not readily available, but I will try to let both my hon. Friends know it. I can justify these payments—I suspect that my hon. Friends share my view—in terms of social justice rather than economic mobility. They are the entitlement of redundant men, irrespective of our feelings about their parent companies' willingness or ability to meet their liabilities.

My hon. Friend also asked about companies going into liquidation and being taken over, and about employees still doing virtually the same job but under the new company, I am advised that, if they are continuing in the same job under the same conditions and on the same basis, they are not entitled to redundancy payments, but I know that, in this area of transfer from one ownership to another, there are anomalies, some of which have been drawn to our attention and many of which we know about from our own experience.

When liquidation was not the issue, but change of ownership, we feared that this would happen when farms changed hands, but a High Court ruling absolved us of responsibility for that anomaly. We also thought that it might happen when a television franchise moved from one company to another. That anomaly persists. There are anomalies and, as part of our study of them, we want to do our best to identify and eradicate them. But, generally, continuation of employment on the same basis and conditions does not, simply because of change of ownership, entitle someone to redundancy payments.

On the other hand, of course, the offer of another job some miles away from the original place of employment may do so, because the rules of the scheme say that the alternative offer must be reasonable and it is up to the industrial tribunals to interpret what "reasonable" means in that context. Interpreting what is reasonable is very difficult, as anyone who has heard this debate will confirm. It is not always a job which the tribunals do to universal satisfaction, but it is their task, imposed on them by the House and the Government, to determine what is reasonable alternative employment. Sometimes, the distance of that employment from the original place of work is crucial.

I was asked what would happen if, on the presumption that we had been overcautious in our treatment—

Mr. Barnett

Will my hon. Friend deal with the shipbuilding case?

Mr. Hattersley

My hon. Friend will have to let me look at that in more detail and let him know our conclusions later. He knows the difficulties of commenting on and judging it at this stage. It is right to draw our attention to it, but I will comment on it later. I would much rather turn to the point about the possibilities of surplus on the Fund.

Mr. David Mitchell

Does the hon. Gentleman intend to say something about the man who is carrying on the same job and suddenly receives manna from heaven?

Mr. Hattersley

I thought that I had done so. I do not like the hon. Gentleman's description, "manna from heaven", or his phrase, "carrying on the same job". I sought at least to deal with the situation in which a company changes hands. Perhaps the hon. Gentleman will be comforted by repetition. I will tell him again that, by and large, redundancy payments are not made or received in such circumstances but that there are anomalies which we are looking at and intend to rectify. If that meets the hon. Gentleman's "manna from heaven" point, I am glad.

I am particularly anxious to meet the point put by the hon. Member for Paddington, South (Mr. Scott) about a possible surplus in the Fund. I repeat that, by solving the deficit problem with the formula we proposed—that is, by increasing the individual company's contribution rather than by increasing the general levy—we are less likely to have a large deficit on the Fund. But, if I assume that the hon. Gentleman is right and a surplus is possible, I would point out that my speech earlier was intended to convey that we have no wish to run a substantial and continuous surplus either.

From time to time, there is bound to be a surplus if the Fund is properly managed. It is intended to average out between periods of large payments and periods of small payments. My right hon. Friend wrote to the C.B.I. on 29th July making it clear that, if there were such a substantial surplus, she would regard it as her duty to examine again the rate of levy in order to ensure that the surplus did not simply continue and grow.

I have been asked to make comments on three specific points. The hon. Member for Paddington, South referred to my suggestion that one of the objectives of the Bill was to get companies to think more carefully about redundancies. I do not withdraw from that hope one iota. One of the objectives is indeed to make them think more carefully about redundancies and to be less enthusiastic than in the past to make older men redundant. It would be out of order to deal at length with the tendency over the last three years for older men, the recipients of larger redundancy pay, to form an increasing proportion of those made redundant. One of the objectives of the Bill is to make companies think twice before they contribute to that undesirable process.

The second point is how little or how much this is going to cost employers. We are faced with three alternatives. The first is to do what the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) advocates consistently and rationally—that the deficit on the Fund should be financed by a larger general contribution. I reject that solution, although it is a cogent one. The second solution is that we should increase the individual commitment of the individual company and reduce the rebate from the Fund. The third and only other alternative is that there should be a substantial alteration to the level of payments received by the individual employees.

I reject the first proposal, advocate the second and overwhelmingly reject the third. One cannot have it each way. One must decide which way one believes the redundancy payments scheme should be put into balance.

The hon. Member urged me to remember that the deficit on the Fund is the Government's responsibility and that industry has now to make good what he described as our miscalculation. I ask him again to consider the nature of the Fund, to realise that it is industry's fund, contributed to by industry in two different ways. I urge him to reflect also on the proposition that I made on Second Reading—that, had we been entirely precise in the estimate of outgoings from the Fund, the total bill for industry either in the form of levy or of direct contributions to redundancy payments, would have been exactly the same.

Our miscalculation, if that is what it was, has not caused industry, as a whole, to pay an extra penny but, indeed, to pay rather less than it would otherwise have done, because it has been financed by £17 million worth of borrowing. Had we had the calculation right from the word "go", industry would have made not only the payments it has made but the £17 million as well. If the Amendment is moved because it is claimed that our miscalculation has somehow caused industry extra expenditure, then the argument behind it is misconceived and misunderstands

the nature of the Fund. I must again ask my right hon. and hon. Friends to reject it.

Question put, That the Amendment be made:—

The Committee divided: Ayes 152, Noes 195.

Division No. 61.]	AYES	[5.15 p.m.
Alison, Michael (Barkston Ash)	Grimond, Rt. Hn. J.	Peel, John
Allason, James (Hemel Hempstead)	Gurden, Harold	Percival, Ian
Astor, John	Hall, John (Wycombe)	Peyton, John
Atkins, Humphrey (M't'n & M'd'n)	Hall-Davis, A. G. F.	Powell, Rt. Hn. J. Enoch
Baker, Kenneth (Acton)	Harris, Frederic (Croydon, N. W.)	Price, David (Eastleigh)
Balniel, Lord	Harrison, Col. Sir Harwood (Eye)	Prior, J. M. L.
Barber, Rt. Hn. Anthony	Harvey, Sir Arthur Vere	Pym, Francis
Bell, Ronald	Hawkins, Paul	Ramsden, Rt. Hn. James
Bennett, Sir Frederic (Torquay)	Heath, Rt. Hn. Edward	Renton, Rt. Hn. Sir David
Bessell, Peter	Higgins, Terence L.	Rhys Williams, Sir Brandon
Bitten, John	Hill, J. E. B.	Ridley, Hn. Nicholas
Biggs-Davison, John	Holland, Philip	Rossi, Hugh (Hornsey)
Black, Sir Cyril	Hooson, Emlyn	Royle, Anthony
Blaker, Peter	Hordern, Peter	Russell, sir Ronald
Boardman, Tom (Leicester, S. W.)	Hornby, Richard	St. John-Stevas, Norman
Boyd-Carpenter, Rt. Hn. John	Howell, David (Guildford)	Scott, Nicholas
Braine, Bernard	Hunt, John
Brewis, John	Jennings, J. C. (Burton)	Scott-Hopkins, James
Bromley-Davenport, Lt. -Col. Sir Walter	Johnson Smith, G. (E. Grinstead)	Silvester, Frederick
	Jopling, Michael	Smith, Dudley (W'wick & L'mington)
Buchanan-Smith, Alick (Angus, N&M)	Kaberry, Sir Donald	Smith, John (London & W'minster)
Bullus, Sir Eric	Kershaw, Anthony	Speed, Keith
Campbell, B. (Oldham, W.)	Kirk, Peter	Steel, David (Roxburgh)
Campbell, Gordon (Moray & Nairn)	Knight, Mrs. Jill	Stodart, Anthony
Carlisle, Mark	Lancaster, Col. C. G.	Stoddart-Scott, Col. Sir M.
Carr, Rt. Hn. Robert	Lane, David	Summers, Sir Spencer
Channon, H. P. C.	Langford-Holt, Sir John	Tapsell, Peter
Clegg, Walter	Legge-Bourke, Sir Harry	Taylor, Sir Charles (Eastbourne)
Cooke, Robert	Lewis, Kenneth (Rutland)	Taylor, Edward M.(G'gow, Cathcart)
Corfield, F. V.	Lloyd, Ian (P'tsm'th, Langstone)	Taylor, Frank (Moss Side)
Costain, A. P.	Lubbock, Eric	Temple, John M.
Craddock, Sir Beresford (Spelthorne)	Mackenzie, Alasdair (Ross&Crom'ty)	Thatcher, Mrs. Margaret
Crouch, David	Maclean, Sir Fitzroy	Thorpe, Rt. Hn. Jeremy
Cunningham, Sir Knox	Mawby, Ray	van Straubenzee, W. R.
Dalkeith, Earl of	Maxwell-Hyslop, R. J.	Vaughan-Morgan, Rt. Hn. Sir John
Davidson, James (Aberdeenshire, W.)	Mills, Peter (Torrington)	Waddington, David
Dodds-Parker, Douglas	Mills, Straiten (Belfast, N.)	Wainwright, Richard (Come Valley)
Drayson, G. B.	Mitchell, David (Basingstoke)	Walker-Smith, Rt. Hn. Sir Derek
Eden, Sir John	More, Jasper	Wall, Patrick
Elliot, Capt. Walter (Carshalton)	Morgan, Geraint (Denbigh)	Walters, Dennis
Eyre, Reginald	Mott-Radclyffe, Sir Charles	Ward, Dame Irene
Farr, John	Munro-Lucas-Tooth, Sir Hugh	Weatherill, Bernard
Fletcher-Cooke, Charles	Murton, Oscar	Whitelaw, Rt. Hn. William
Foster, Sir John		Williams, Donald (Dudley)
G'bson-Watt, David	Nabarro, Sir Gerald	Wilson, Geoffrey (Truro)
Cilmour, Ian (Norfolk, C.)	Nicholls, Sir Harmar	Wolrige-Gordon, Patrick
Clover, Sir Douglas	Noble, Rt. Hn. Michael	Wood, Rt. Hn. Richard
Godber, Rt. Hn. J. B.	Onslow, Cranley	Worsley, Marcus
Goodhew, Victor	Osborne, Sir Cyril (Louth)	Younger, Hn. George
Cower, Raymond	Page, Graham (Crosby)
Grant, Anthony	Page, John (Harrow, W.)	TELLERS FOR THE AYES:
Grant-Ferris, R.	Pardoe, John	Mr. Timothy Kitson and
Gresham Cooke, R.	Pearson, Sir Frank (Clitheroe)	Mr. Hector Monro.
NOES
Albu, Austen	Brooks, Edwin	Davies, G. Elfed (Rhondda, E.)
Ashley, Jack	Brown, Ft. W. (Shoreditch & F'bury)	Davies, Dr. Ernest (Stretford)
Ashton, Joe (Bassetlaw)	Buchan, Norman	Davies, Harold (Leek)
Atkinson, Norman (Tottenham)	Buchanan, Richard (G'gow, Sp'burn)	Davies, Ifor (Cower)
Barnett, Joel	Cant, R. B.	Davies, S. O. (Merthyr)
Bence, Cyril	Carmichael, Neil	Dell, Edmund
Bennett, James (G'gow, Bridgeton)	Chapman, Donald	Dempsey, James
Bidwell, Sydney	Coleman, Donald	Diamond, Rt. Hn. John
Bishop, E. S.	Concannon, J. D.	Dickens, James
Blackburn, F.	Conlan, Bernard	Doig, Peter
Blenkinsop, Arthur	Crossman, Rt. Hn. Richard	Driberg, Tom
Boardman, H. (Leigh)	Cullen, Mrs. Alice	Dunnett, Jack
Booth, Albert	Dalyell, Tam	Dunwoody, Mrs. Gwyneth (Exeter)
Dunwoody, Dr. John (F'th & C'b'e)	Kerr, Russell (Feltham)	Parkyn, Brian (Bedford)
Eadie, Alex	Lawson, George	Pearson, Arthur (Pontypridd)
Edwards, William (Merioneth)	Ledger, Ron	Peart, Rt. Hn. Fred
Ellis, John	Lee, Rt. Hn. Frederick (Newton)	Pentland, Norman
English, Michael	Lee, John (Reading)	Perry, Ernest G. (Battersea, S.)
Evans, Fred (Caerphilly)	Lestor, Miss Joan	Perry, George H. (Nottingham, S.)
Evans, Cwynfor (C'marthen)	Lewis, Arthur (W. Ham, N.)	Price, Thomas (Westhoughton)
Ewing, Mrs. Winifred	Lewis, Ron (Carlisle)	Price, William (Rugby)
Faulds, Andrew	Upton, Marcus	Probert, Arthur
Finch, Harold	Lomas, Kenneth	Rankin, John
Fletcher, Raymond (Ilkeston)	Loughlin, Charles	Rees, Merlyn
Foot, Michael (Ebbw Vale)	Luard, Evan	Reynolds, Rt. Hn. G. W.
Ford, Ben	McBride, Neil	Rhodes, Geoffrey
Forrester, John	McCann, John	Richard, Ivor
Fowler, Gerry	MacColl, James	Roberts, Albert (Normanton)
Fraser, John (Norwood)	MacDermot, Niall	Robertson, John (Paisley)
Freeson, Reginald	Macdonald, A. H.	Rodgers, William (Stockton)
Galpern, Sir Myer	McGuire, Michael	Roebuck, Roy
Gardner, Tony	McKay, Mrs. Margaret	Ross, Rt. Hn. William
Garrett, W. E.	Maclennan, Robert	Rowlands, E.
Ginsburg, David	McMillan, Tom (Glasgow, C.)	Sheldon, Robert
Gray, Dr. Hugh (Yarmouth)	McNamara, J. Kevin	Short, Mrs. Renée (W'hampton, N. E.)
Greenwood, Rt. Hn, Anthony	Mahon, Peter (Preston, S.)	Silkin, Rt. Hn. John (Deptford)
Gregory, Arnold	Manuel, Archie	Silkin, Hn. S. C. (Dulwich)
Grey, Charles (Durham)	Mapp, Charles	Silverman, Julius
Griffiths, Rt. Hn. James (Llanelly)	Marks, Kenneth	Small, William
Hamilton, William (Fife, W.)	Maxwell, Robert	Spriggs, Leslie
Hamling, William	Mayhew, Christopher	Steele, Thomas (Dunbartonshire, W.)
Harper, Joseph	Mendelson, John	Summerskill, Hn. Dr. Shirley
Harrison, Walter (Wakefield)	Mikardo, Ian	Taverne, Dick
Hart, Rt. Hn. Judith	Miller, Dr. M. S.	Thomas, Rt. Hn. George
Hattersley, Roy		Thornton, Ernest
Hazell, Bert	Milne, Edward (Blyth)	Tinn, James
	Molloy, William
Heffer, Eric S.	Moonman, Eric	Varley, Eric G.
Henig, Stanley	Morgan, Elystan (Cardiganshire)	Wainwright, Edwin (Dearne Valley)
Herbison, Rt. Hn. Margaret	Morris, Alfred (Wythenshawe)	Walker, Harold (Doncaster)
Hobden, Dennis	Morris, Charles R. (Openshaw)	Watkins, David (Consett)
Hooley, Frank	Murray, Albert	Watkins, Tudor (Brecon & Radnor)
Homer, John	Newens, Stan	Wellbeloved, James
Howarth, Harry (Wellingborough)	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Wells, William (Walsall, N.)
Hoy, James	Ogden, Eric	Whitaker, Ben
Huckfield, Leslie		Wilkins, W. A.
Hughes, Emrys (Ayrshire, S.)	O'Malley, Brian	Williams, Alan Lee (Hornchurch)
Hughes, Hector (Aberdeen, N.)	Orbach, Maurice	Williams, Clifford (Abertillery)
Hughes, Roy (Newport)	Orme, Stanley	Willis, Rt. Hn. George
Hunter, Adam	Oswald, Thomas	Wilson, William (Coventry, S.)
Hynd, John	Owen, Dr. David (Plymouth, S'tn)	Winnick, David
Johnson, Carol (Lewisham, S.)	Owen, Will (Morpeth)	Woodburn, Rt. Hn. A.
Johnson, James (K'ston-on-Hull, W.)	Padley, Walter	Woof, Robert
Jones, Dan (Burnley)	Page, Derek (King's Lynn)
Judd, Frank	Palmer, Arthur	TELLERS FOR THE NOES:
Kelley, Richard	Pannell, Rt. Hn. Charles	Mr. Alan Fitch and
Kenyon, Clifford	Park, Trevor	Mr. loan L. Evans.
Kerr, Mrs. Anne (R'ter & Chatham)	Parker, John (Dagenham)

Mr. John Page (Harrow, West)

I beg to move Amendment No. 4, in page 1, line 13, at end insert: (2) Subsection (1) of this section shall not have effect where an employer employs less than ten employees. When, at half-past one this morning, I was turning over the leaves of the bound volume of the Committee stage of the original Bill, I was amazed to find that the Under-Secretary of State was not then the anchor man of the Ministry, and that it was not until later that he joined the right hon. Member for Southwark (Mr. Gunter) at the then Ministry of Labour, of blessed memory. Ever since he has been the anchor man of the Ministry, the great explainer of the reasons why, once every six months or so, the Redundancy Fund goes wrong.

This afternoon there is an opportunity for the hon. Gentleman to take a real step forward in making this new Bill and the effect that it will have on the redundancy scheme much more acceptable. The object of this Amendment is to leave the position as it is now for the man employing fewer than 10 persons, even though now, by the previous Vote, we have to accept that changes will be made in the scheme as a whole.

It was during the last 20 minutes of Committee in 1965 that a Government Amendment was discussed, altering the scheme from a half and half payment by individual companies and the Fund, to a one-third and two-thirds basis in general. This was after much discussion and great pressure and pleading on the part of my right hon. Friend the Member for Grantham (Mr. Godber), who pointed out that the 50–50 arrangement meant that the full impact of the cost of the scheme would fall on declining industries first, and secondly, and most important, on the small employer. The then Minister of Labour accepted this view, and it was for this specific reason that the change was made to one-third and two-thirds.

[Mr. SYDNEY IRVING in the Chair]

5.30 p.m.

We so often in our debates forget the small employer; we talk about I.C.I. B.L.M.H., oil companies and so on and forget the small contractor, the small shopkeeper and the small businessman. I do not believe that the hon. Gentleman can contradict me when I say that a large number of the bankruptcies which caused the Fund to pay out £2½ million last year were of small employers. This is an apposite example of the point which I am laboriously trying to make.

We have frequently asked for more information about where redundancies take place, and we must wait for another nine or ten months before the Minister will tell us the size of the firms in which redundancies occur and the percentage of employees in each firm who have been declared redundant. The hon. Gentleman is not sure that he will do that, but I am informed by the Library that his office has promised the information within the year, which is a long time to wait. We must, therefore, stick to supposition. I am sure that the Minister cannot deny that redundancies cause a greater impact on small companies than on large companies. If one employee in a firm employing four people is declared redundant, that represents a 25 per cent. redundancy rate. An employer employing 20,000 people would have to declare redundant 5,000 employees to reach the same proportion.

The reason why the change was made from half and half to one-third and two-thirds was mainly to protect the interests of the small employer, and that was on the evidence of 1965. There is further evidence in The Times this morning, which reports a pact on redundancy made in France, and I wonder whether this has been drawn to the attention of the hon. Gentleman. It is a relief that this refers to France and not to Sweden; it is a nice change to be able to get away from Scandinavia for all the examples of progress in this area which we have so often considered. The agreement made yesterday in France between employers' organisations and trade unions was as follows: for mergers or rationalisation, three months' notice of dismissal would be given; for compulsory closure or winding up of a firm for lack of orders, it would be eight days if fewer than 100 employees were involved, and 15 days if there were more. Here again, differentiation is made between small employers employing small numbers and large employers employing large numbers, and this is worthy of consideration.

Who are the small employers whose interests we are considering in this Amendment? One of the large groups of small employers are the small farmers. A previous candidate for my seat in Harrow, West was Sir Alan Herbert, a man whose originality and example we all wish to emulate, particularly the fact that he sold his election address, from which I will quote, for 1s. to his potential constituents. In this address he said: Agriculture. I know nothing about agriculture. I am in the same position, but I hope that my hon. and gallant Friend the Member for Eye (Sir H. Harrison) will catch your eye, Mr. Gourlay, and explain how the farming community and the small farmer would be affected. All one can tell from statistics is that there are a great many small farmers who employ one or two farm workers whose income is far below that of the national average wage of those employed in productive industry.

A small shopkeeper who, through illness, had to give up his business and declare redundant one or two of his employees, who may have been with him for many years, would under the Bill have to pay 50 per cent. of the redundancy payment. I beg the Government to realise what a great emergency this would be for him.

Let us also take, for example, a plumber, who may die while running a small company. Small plumbers and small builders work to narrow margins, with grossly inadequate working capital. It will be within the experience of many hon. Members who have had work done in their homes by a small builder or plumber that on Friday morning he will ask for something on account for the work which has already been done so that he may pay his employees. This happened to me a fortnight ago. Such a man, or his widow, will not be able to shoulder the extra burden.

Finally, let us consider the position of an elderly vicar and his wife who for many years have employed a housekeeper. When the ageing man retires, they find it impossible to keep on their housekeeper. Surely it would be the wish of the House and of those other companies which have paid in to the Fund to ensure that this new burden is not placed upon people just when they are least able to bear the extra expense.

The Minister has said that the average payment for redundancy is £250. But averages are not very helpful, and many an intrepid explorer has drowned in a river with an average depth of two feet. In the same way, there are many small employers who will drown when the level of the redundancy payments that they have to make is raised by the amount suggested.

If this Amendment is accepted, I cannot believe that the exclusion of those employing fewer than 10 people will endanger the viability of the Fund under the new Gladstonian regime of the Government. However, if the hon. Gentleman cannot accept the figure of 10, let us have a go at five. Let us exclude employers who employ five or fewer, if he cannot give in to 10 or fewer. Let his heart of stone be changed to one of warmth and outgoing goodness. Let him accept the spirit of the Amendment because, by doing that, he will be able to leave the Chamber today feeling that he has done a good deed in ensuring the greater success of this Measure and the happiness of many.

I hope very much that the hon. Gentleman will rise soon to say that he accepts the Amendment.

Sir H. Harrison

I rise to support my hon. Friend the Member for Harrow, West (Mr. John Page), though I should have preferred to see the insertion of the figure of 25 employees. However, I am sure that my right hon. Friend the Member for Mitcham (Mr. R. Carr), with his great knowledge of these matters, has taken soundings through the usual channels and knows that whereas 25 will not be acceptable, 10 may be. I was a little alarmed, however, to hear my hon. Friend come down as low as five in his bidding.

I suppose that in my constituency there are as many small businesses of all sorts as in most. In that connection, I want to correct my hon. Friend on one minor point. He spoke about small fanners. In my part of the world, a farmer employing two or three men today is quite big. A farmer employing eight or nine men is extremely big. However, we have to consider not only small farmers, because there are a large number of young men who have set themselves up as contractors to help small farmers and employ five, six or even eight men. In addition, there are still one or two small corn merchants, and in the larger villages of a scattered constituency like mine one finds many shopkeepers who employ three, four or five people.

5.45 p.m.

The Government have hit small businesses harder than they realise. It is the small business which has borne the brunt of the Government's anti-private enterprise legislation. The big firms can sustain the attacks made upon them, but I do not think the smaller firms can.

In my view, the reason why the figure of 10 has been chosen is that it is probably businesses employing fewer than that number which cannot afford full-time secretaries. Farmers, shopkeepers and contractors in that position do their own book work, assuming that their wives do not help. Whenever I talk to such people, my advice to them always is to pay the greatest attention to keeping their accounts and answering Government forms. These are the very people who are so keen to get out and seek new business that they tend to neglect this aspect.

In recent weeks, the Minister has been having a battle about one extra charge which is to be placed upon the shoulders of our small farmers. It would be a nice gesture if the hon. Gentleman could give way on this Amendment, in view of that.

My hon. Friend mentioned the problems of the private employer, but I do not think that his example of an elderly vicar was a very apt one, especially when one considers what we pay our vicars. I much prefer the word "rector". I have always thought it to be a better word. In any event, we do not pay them anywhere near the remuneration which would enable them to afford to employ housekeepers. A better example might have been a richer retired widower who employs a housekeeper. The fact remains that my hon. Friend's point is a very real one to some people.

I want to add my support to what my hon. Friend said on behalf of our farmers, who are still producing an enormous amount of food, on behalf of young men starting in business as contractors or garage proprietors, who are so essential in keeping our farming industry going, and on behalf of our small shopkeepers. It must be remembered that while the Government attack small businesses, it is from small businesses that flourishing companies are built. Morris Motors and Dunlop are but two examples.

The Government are hitting too much at the enterprise of those who run smaller businesses, and many younger members of our community find it less and less worth while to go into business on their own. I hope that the hon. Gentleman has discussed the matter with his right hon. Friend and is in a position to give way on this point. It would be a useful and encouraging concession to a very hard working section of our society.

Mr. Ridley

It is the fact that the Government took the wrong decision on the last Amendment which prompts me to support this one. If contributions had been increased instead of the payments of individual employers, there would not be this problem facing the small employer.

I would endorse what my hon. and gallant Friend the Member for Eye (Sir H. Harrison) said, and I would add only a word on behalf of our farmers and small shopkeepers, because they are the people who will suffer most of all.

The problem is that so often these people retire at the end of a long working life, the business comes to an end, and they have to declare their workers redundant. The shop or firm employing two, four or six people often comes to an end in that way. Therefore, the cost of redundancy will fall at the same time on the whole work force just as a man is retiring.

The Under-Secretary made some play about taxation on the last Amendment. But surely in this case the farmer's or shopkeeper's income will not be enough to cover his liability for the employer's contribution to the redundancy payments in one year's taxable income. This is already a serious problem.

I have a letter here from a Mr. Harold Brown, a farmer in Huntingdonshire, who says: We had decided to retire this year, and as the average length of service of our employees is nearly 40 years I was only too pleased to budget for a contribution of two-ninths towards their redundancy payments. Under this Bill the employer's contribution will be more than doubled and this must be a great hardship to the small businessman on the point of retirement. I am sure that Mr. Harold Brown is typical. This bites harder than on the larger industrial firm or the corporate company because all the employees will be made redundant at the same time on the expiration of the life of the business. In many cases the shop or the farm will be purchased by someone else and there will be continuity of employment for the employees. Therefore, we have genuine hardship here.

The Under-Secretary may not want to make an exception about the number of employees, be it 25, 10 or five. I do not wish to enter the bidding, but I see objections to defining the small employer in terms of the numbers that he employs. However, there is a point that needs to be looked into to see whether some way can be found of getting special help for the people who will be adversely affected. Representing an agricultural constituency, I can assure the hon. Gentleman that there is widespread alarm about the proposals in the Bill. I think that this is a genuine point to which he should address himself in an endeavour to clear it up.

Mr. Kenneth Lewis

I support my hon. Friends in pressing the Amendment. It will obviously not have any effect on a nationalised industry or any other great corporation, but it will be helpful to the man employing a small number of people, and, more important, it will be of advantage to the employee in a small business.

I do not want to press the Under-Secretary unduly about farmers, although they are important in this connection. However, if he has much more trouble from the farmers, after the trouble with the training levy, he will begin to wonder in which Ministry he is working. On top of all the other things a farmer has to bear today—a high Bank Rate with which he must contend to finance his business, the training levy and all the rest—he finds it difficult to budget for redundancy payments which may be involved where an employee has been with him for many years. A good deal of advantage is gained by small businesses in particular by retaining employees for many years. A case can be made out for getting mobility of labour amongst the larger firms, but amongst the smaller firms the contribution which they make to the economy of the country as a whole largely depends on retaining one or two men of good skill over a long period and having the advantage of their services.

We are not asking that the small businesses should be absolved from payment altogether. This was settled long ago in the Act. All we are asking is that they should be exempt from the Bill by not having to contribute the increased amount.

As I say, I think that the Amendment is of advantage not only to the employer but to the employee. I have known a number of cases where a small employer has tried to avoid making a redundancy payment. He can avoid making a redundancy payment in a number of ways. One case which came to my attention concerned a man who had been away from work for a period through sickness. When he went back to work he found that his position had been filled and the employer simply said that he had not the kind of work available for this man that he was previously doing, and so the man got the sack. This was a very hard case. Because it was a small business the employee had not been given the information which indicated his full rights under the Act. He, therefore, did not appeal in time and got no payment whatsoever. I believe that the advantage of assisting the employer in this case will also assist the employee. Because the small business is given this kind of exemption it will be less inclined to try to dodge the payments. The small business employing a few people finds these burdens particularly hard. I hope, therefore, that the Minister will think in terms of assisting both the small business and employees by accepting the Amendment.

Mr. Cyril Bence (Dunbartonshire, East)

I have a great deal of sympathy for the view expressed by hon. Gentlemen opposite about the small business, but I am sorry that they have limited their sympathy to the man employing five, 10 or 25 people. My experience in the industrial and agricultural world is that some of the problems involved in the type of legislation that we have had over the last 20 to 30 years affect the man employing between 50 and 200 or 300 men. The small industrial or commercial enterprise employing between 50 and 200 men is finding itself in a highly competitive world. Liquidity for such organisations is very difficult. Bank credit is not so easy to come by, and they have a hard life. This may be for technological reasons. I do not think it is for Government reasons.

I believe that the Government are as sympathetic as any Government have been to the small entrepreneur. We are living in a world where the small entrepreneur is being driven out by the large one. I could mention cases over the last 40 years where the large entrepreneur has crushed, by all kinds of methods, the small entrepreneur. I could give instance after instance where the small business has been crushed not by actions of the Government but by actions of the large entrepreneur. The most famous one is the Birmingham artificial jewellery industry. I do not want to name the companies concerned, but they were crushed between 1926 and 1936. In a decade those small jewellery manufacturers were smashed, not by the Governments of the period—they had nothing to do with it—but by some very large entrepreneurs and distributors of artificial jewellery.

This is a continuing process. With all the sympathy in the world, I do not think that acceptance of the Amendment will give one iota of benefit to the small industrial concern employing between 25 and 200 men. Other factors in our society could help the small manufacturer. I do not say that no one will benefit. It is an ill wind that blows no good, but I do not think that the Minisster can breach a principle on the basis of doing this for those who employ fewer than ten men, because, as I have said, the hardest hit is the man who is trying to run a small industrial enterprise with between 100 and 300 men.

6.0 p.m.

Mr. Hattersley

As one would expect, the hon. Member for Harrow, West (Mr. John Page) quoted three of the best examples that he could possibly create to substantiate his case. Perhaps I might remind the House of the three examples. The first was the widow of a plumber whose company survived only on the advance payment of the eventual settlement. The second was a shopkeeper who, because of death or illness, must dismiss a servant of long standing. The third was a clergyman who must make an elderly retainer redundant. I think the Committee will agree that no matter how diligently the hon. Gentleman searched he could not have found three harder cases than those. I do not diminish their importance because of that, but I say that those cases were properly and carefully constructed to draw the attention of the Committee to what might well happen in the case of an employer of a small number of employees.

The hon. Gentleman's case was based on the assumption that a small company, or an individual, employed only a few people, and that if one or some of them had to be made redundant it was due to economic difficulties and hardship. That does not conform with the facts. Sometimes it may be true, but, equally, often it may not be true.

The plumbing contractor may, for instance, be making his plumber redundant because he is planning to move from using traditional methods to mass-produced, factory constructed sanitation systems. The shopkeeper may be changing from his corner shop to a more profitable self-service system. The vicar or the rector may be discharging his servant because he is moving from the vicarage to a bishop's palace. All these things can happen, and if the hon. Gentleman suggests that my hypotheses are wildly improbable, I can only say that I suspect that they are about as improbable or probable as his. The two happen to be at the opposite ends of the spectrum of need and the spectrum of difficulty.

The point that I wish to try to make by offering the hon. Gentleman an example diametrically opposed to those he gave is that the problem to which he draws attention is one not of size of units but of circumstances of redundancy. The Committee is sympathetic to those employers who find hardship in making redundancy payments to their employees. But if the House is sympathetic to their needs, it must be borne in mind that if their needs are to be met by sources other than the resources of the employer, it is necessary to decide how that payment is to be made, and how an employer's contribution to his employee's redundancy payment is to be financed.

To take the examples given by the hon. Gentleman, hon. Members must clearly say that if we wish to make an exception for the plumber who has gone out of business because it is no longer profitable simply because he employs only nine men, we must equally, according to the Amendment, make an exception for the plumber who is changing his business because he is expanding from nine to 90 men. We must also make an exception for the shopkeeper who discharges men not because his is no longer a profitable organisation but because he is becoming more profitable with a smaller labour content.

The argument should be not about size but about circumstance, and if we are talking about hardship of circumstance, we have to answer two questions. First, what are the criteria of hardship? Secondly, who is to meet the payments made by people in these circumstances? If we support the Amendment, we are in effect saying that as the small employer shall not be required to pay the same proportion of the individual redundancy payment as the larger employer, the difference must be paid for him by the rest of industry.

Mr. Robert Carr (Mitcham) indicated assent.

Mr. Hattersley

The right hon. Gentleman agrees with that concept. I have to tell him that I do not, and that I very much doubt whether industry as a whole agrees with it. I could not suggest that the small company, simply because of its size—I emphasise, not because of hardship—should get a special concession. I do not think that it would be right for small companies to be subsidised by large ones. Nor can I suggest that the payment made to individual employees should be different if they are employees of small companies rather than of large ones. If the subsidy cannot be paid by other companies, and if the payment cannot be changed, the only conclusion that I can draw is that the payment and the rebate must remain the same for companies of all sizes.

This does not seem to me to be an unduly harsh provision. Nor does it seem to batten unduly on the difficulties and problems of the small companies. They all have the same obligation in terms of industrial efficiency and social equity, and I must ask my hon. Friends to accept that a small company must discharge this obligation, and accept, too, that we must resist the Amendment.

Mr. R. Carr

I must protest at what I think is a shallow and semantic argument for rejecting the Amendment.

The hon. Gentleman said that he could not agree that it would be right for a large company in any way to subsidise a small one in a matter of this kind. I cannot help pointing out that there are many respects in which the small company, merely because it is a small company, in effect subsidises large companies. Consider the operation of the Industrial Training Boards. There are many aspects of the grants available under this scheme—for example, grants for management training—which simply are not available to the very small company merely because of its size. That is because it cannot allow its only manager to go on a course, simply because he is the only manager, whereas a large company does, and can, and should allow its managers to go on appropriate courses. This argument about the large company subsidising the small one is extremely narrow and inconclusive, and it really is a matter of degree and not of absolutes.

The other argument which the hon. Gentleman used was one which I likened to what I was told in the days long ago when I was taught geometry, about proof by reductio ad absurdum. To say that a smaller man may have to declare people redundant because his business is growing in prosperity, or to say that a vicar may have to discharge a retainer because he is moving from his small rectory to the bishop's palace, may, hypothetically, be an argument. I know that my hon. Friend the Member for Harrow, West (Mr. John Page) chose cases at the other extreme, but if we are to consider extreme cases at all, surely we ought in common humanity to consider the unfortunate extremes rather than the fortunate cases, and give benefit to the unfortunate side?

More important, rather than consider extremes, surely we ought to consider the average overall situation. If a man employs five people and gets rid of two of them, he loses 40 per cent. of his labour force. That is the equivalent of a firm employing 10,000 people getting rid of 4,000 of its labour force. The liability on the small employer to make redundancy payments in respect of two people may seem small if we regard it just as a matter of two people, but if we regard it in terms of 40 per cent. of his labour force we see that a relatively small redundancy in terms of numbers places very much heavier burdens on the really small employer than on the large one.

I am not without sympathy for extending this definition of "small" upwards, although in principle I do not like the definitions of small or large. Where does one draw the line? I agree therefore that one is only trying to do rough justice, but some rough justice is better than no justice at all. If I am correctly informed, one of the major reasons for having the initial rebate scales at the level they were rather than the level now proposed was simply the problem of the small employer. I believe one of the substantial reasons in the mind of the present Government when bringing forward the 1965 Bill, now the Redundancy Payments Act, and in fixing the old level of rebates was the position of the small employer. All we are asking is that since, because of the position of the Fund, the Government, in their wisdom—or lack of it—are saying that the level of rebate should now be reduced to 50 per cent., we must go back to the initial realisation that this creates a special and greater problem for the small employer.

We do not like discriminating in principle between small and large employers. But since the conditions which made that lack of discrimination possible—the placing of the level of rebate originally at a level far higher than 50 per cent.—are now being removed, we think common justice requires that the discrimination in favour of the small employer should be introduced.

I cannot believe that there are any sizeable companies in this country which would object in any substantial way to the very small amount of subsidy that they would be giving if the Amendment were accepted. If one extended it up to the sort of level suggested by the hon. Member for Dunbartonshire, East (Mr. Bence), the position might be different. A firm of 200 or 300 people can be a very real competitor even to the big giants in certain industries. In those

circumstances, one might get objections in principle from the large companies to subsidising that scale of competitor. There is no substantial company, however, which would object to giving this extra help to the scale of employers suggested in the Amendment.

I ask the Government to think about this matter again. The consideration which has been given is not really worthy of what it deserves. If the Government will not reconsider the matter, I shall certainly have to ask my right hon. and hon. Friends to divide the Committee.

Question put, That the Amendment be made:—

The Committee divided: Ayes 130, Noes, 175.

Division No. 62.]	AYES	[6.13 p.m.
Alison, Michael (Barkston Ash)	Gurden, Harold	Peel, John
Allason, James (Hemel Hempstead)	Hall, John (Wycombe)	Peyton, John
Astor, John	Hall-Davis, A. G. F.	Powell, Rt. Hn. J. Enoch
Baker, Kenneth (Acton)	Harris, Frederic (Croydon, N. W.)	Price, David (Eastleigh)
Barber, Rt. Hn. Anthony	Harrison, Col. Sir Harwood (Eye)	Prior, J. M. L.
Bell, Ronald	Harvey, Sir Arthur Vere	Pym, Francis
Bennett, Sir Frederic (Torquay)	Hawkins, Paul	Ramsden, Rt. Hn. James
Bessell, Peter	Heald, Rt. Hn. Sir Lionel	Rhys Williams, Sir Brandon
Biffen, John	Heath, Rt. Hn. Edward	Ridley, Hn. Nicholas
Biggs-Davison, John	Higgins, Terence L.	Rossi, Hugh (Hornsey)
Black, Sir Cyril	Hill, J. E. B.	Russell, Sir Ronald
Blaker Peter	Holland, Philip	St. John-Stevas, Norman
Boardman, Tom (Leicester, S. W.)	Hooson, Emlyn	Scott, Nicholas
Boyd-Carpenter, Rt. Hn. John	Hornby, Richard	Scott-Hopkins, James
Braine, Bernard	Hunt, John	Sharples, Richard
Brewis, John	Jennings, J. C. (Burton)	Silvester, Frederick
Bruce-Gardyne, J.	Johnson Smith, G. (E. Grinstead)	Smith, Dudley (W'wick & L'mington)
Buchanan-Smith, Alick (Angus, N&M)	Kaberry, Sir Donald	Smith, John (London & W'minster)
	Kershaw, Anthony	Speed, Keith
Bullus, Sir Eric	Kirk, Peter	Steel, David (Roxburgh)
Campbell, Gordon (Moray & Nairn)	Knight, Mrs. Jill	Stodart, Anthony
Carr, Rt. Hn. Robert	Lancaster, Col. C. G.	Stoddart-Scott, Col. Sir M.
Chichester-Clark, R.	Lane, David	Summers, Sir Spencer
Clegg, Walter	Lewis, Kenneth (Rutland)	Tapsell, Peter
Cooke, Robert	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Taylor, Sir Charles (Eastbourne)
Costain, A. P.	Lloyd, Ian (P'tsm'th, Langstone)	Taylor, Edward M.(G'gow, Cathcart)
Craddock, Sir Beresford (Spelthorne)	Lubbock, Eric	Taylor, Frank (Moss Side)
Crouch, David	Mackenzie, Alasdair (Ross&Crom'ty)	Temple, John M.
Dalkeith, Earl of	Mawby, Ray	Thatcher, Mrs. Margaret
Davidson, James (Aberdeenshire, W.)	Maxwell-Hyslop, R. J.	van Straubenzee, W. R.
Dodds-Parker, Douglas	Mills, Peter (Torrington)	Waddington, David
Drayson, G. B.	Mills, Stratton (Belfast, N.)	Wainwright, Richard (Colne Valley)
Eden, Sir John	Mitchell, David (Basingstoke)	Walker-Smith, Rt. Hn. Sir Derek
Elliot, Capt. Walter (Carshalton)	More, Jasper	Wall, Patick
Eyre, Reginald	Morgan, Geraint (Denbigh)	Ward, Dame Irene
Farr, John	Mott-Radclyffe, Sir Charles	Whitlock, William
Gibson-Watt, David	Murton, Oscar	Williams, Donald (Dudley)
	Nicholls, Sir Harmar	Wilson, Geoffrey (Truro)
Glover, Sir Douglas	Noble, Rt. Hn. Michael	Wolrige-Gordon, Patrick
Godber, Rr. Hn. J. B.		Wood, Rt. Hn. Richard
Goodhew, Victor	Onslow, Cranley	Younger, Hn. George
Cower, Raymond	Osborne, Sir Cyril (Louth)
Grant, Anthony	Page, Graham (Crosby)	TELLERS FOR THE AYES:
Grant-Ferris, R.	Page, John (Harrow, W.)	Mr. Timothy Kitson and
Gresham Cooke, R.	Pardoe, John	Mr. Bernard Weatherill.
Grimond, Rt. Hn. J.	Pearson, Sir Frank (Clitheroe)
NOES
Albu, Austen	Bence, Cyril	Blenkinsop, Arthur
Ashley, Jack	Bennett, James (G'gow, Bridgeton)	Boardman, H. (Leigh)
Ashton, Joe (Bassetlaw)	Bidwell, Sydney	Booth, Albert
Atkinson, Norman (Tottenham)	Bishop, E. S.	Bray, Dr. Jeremy
Barnett, Joel	Blackburn, F.	Brooks, Edwin
Buchan, Norman	Herbison, Rt. Hn. Margaret	Orbach, Maurice
Buchanan, Richard (G'gow, Sp'burn)	Hobden, Dennis	Orme, Stanley
Callaghan, Rt. Hn. James	Hooley, Frank	Oswald, Thomas
Cant, R. B.	Horner, John	Owen, Dr. David (Plymouth, S'tn)
Carmichael, Neil	Howarth, Harry (Wellingborough)	Owen, Will (Morpeth)
Chapman, Donald	Howarth, Robert (Bolton, E.)	Padley, Walter
Coleman, Donald	Hoy, James	Page, Derek (King's Lynn)
Concannon, J. D.	Huckfield, Leslie	Pannell, Rt. Hn. Charles
Crossman, Rt. Hn. Richard	Hughes, Emrys (Ayrshire, S.)	Parker, John (Dagenham)
Cullen, Mrs. Alice	Hughes, Roy (Newport)	Parkyn, Brian (Bedford)
Dalyell, Tam	Hunter, Adam	Pearson, Arthur (Pontypridd)
Davies, G. Elfed (Rhondda, E.)	Hynd, John	Peart, Rt. Hn. Fred
Davies, Harold (Leek)	Johnson, James (K'ston-on-Hull, W.)
Davies, Ifor (Gower)	Jones, Dan (Burnley)	Pentland, Norman
		Perry, Ernest G. (Battersea, S.)
Davies, S. O. (Merthyr)	Judd, Frank	Perry, George H. (Nottingham, S.)
	Kelley, Richard
Dell, Edmund	Kenyon, Clifford	Price, Thomas (Westhoughton)
Dempsey, James	Kerr, Mrs. Anne (R'ter & Chatham)	Price, William (Rugby)
Diamond, Rt Hn. John	Kerr, Russell (Feltham)	Probert, Arthur
Dickens, James	Lawson, George	Rankin, John
Doig, Peter	Ledger, Ron	Rees, Merlyn
Driberg, Tom	Lee, Rt. Hn. Frederick (Newton)	Rhodes, Geoffrey
Dunnett, Jack	Lestor, Miss Joan	Richard, Ivor
Dunwoody, Mrs. Gwyneth (Exeter)	Lewis, Arthur (W. Ham N.)	Roberts, Albert (Normanton)
Dunwoody, Dr. John (F'th & C'b'e)	Lewis, Ron (Carlisle)	Robertson, John (Paisley)
Eadie, Alex	Lomas, Kenneth	Roebuck, Roy
Edwards, William (Merioneth)	Loughlin, Charles	Rogers, George (Kensington, N.)
Ellis, John	Luard, Evan	Ross, Rt. Hn. William
Evans, Fred (Caerphilly)	McBride, Neil	Rowlands, E.
Evans, Gwynfor (C'marthen)	MacDermot Niall	Ryan, John
Ewing, Mrs. Winifred	Macdonald, A. H.	Sheldon, Robert
Faulds, Andrew	McGuire, Michael	Short, Mrs. Renee (W'hampton, N. E.)
Finch, Harold	McKay, Mrs. Margaret	Silkin, Rt. Hn. John (Deptford)
Foley, Maurice	Maclennan, Robert	Silverman, Julius
Foot, Michael (Ebbw Vale)	McMillan, Tom (Glasgow, C.)	Small, William
Ford, Ben	McNamara, J. Kevin	Spriggs, Leslie
Forrester, John	Mahon, Peter (Preston, S.)	Steele, Thomas (Dunbartonshire, W.)
Fowler, Gerry	Mallalieu, J. P. W.(Huddersfield, E.)	Summerskill, Hn. Dr. Shirley
Fraser, John (Norwood)	Manuel, Archie	Thomas, Rt. Hn. George
Freeson, Reginald	Mapp, Charles	Thornton, Ernest
Galpern, Sir Myer	Marks, Kenneth	Tinn, James
Garrett, W. E.	Maxwell, Robert	Varley, Eric G.
Ginsburgh, David	Mayhew, Christopher	Watkins, David (Consett)
Grey, Dr. Hugh (Yarmouth)	Mendelson, John	Watkins, Tudor (Brecon & Radnor)
		Whitaker, Ben
Greenwood, Rt. Hn. Anthony	Mikardo, Ian	Wilkins W. A.
Gregory, Arnold	Miller, Dr. M. S.	Williams, Alan Lee (Hornchurch)
Grey, Charles (Durham)	Milne, Edward (Blyth)	Williams, Clifford (Abertillery)
Griffiths, Rt. Hn. James (Llanelly)	Molloy, William	Willis, Rt. Hn. George
Hamilton, William (Fife, W.)	Moonman, Eric	Wilson, William (Coventry, S.)
Harper, Joseph	Morris, Alfred (Wythenshawe)	Winnick, David
Hart, Rt. Hn. Judith	Morris, Charles R. (Openshaw)	Woodburn, Rt. Hn. A.
Hattersley, Roy	Murray, Albert
Hazell, Bert	Newens, Stan	TELLERS FOR THE NOES:
Heffer, Eric S.	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Mr. John McCann and
Henig, Stanley	O'Malley, Brian	Mr. loan L. Evans.

Mr. Kenneth Lewis

I beg to move Amendment No. 5, in page 2, line 15, leave out 'second' and insert 'fourth'.

The Government have turned down all Opposition Amendments so far, and I hope they will let us complete the Bill by accepting this very simple one. In short, it gives employers a little more time. The Bill was introduced on 21st January. It is now 11th February, and if it should go through speedily—the Opposition will have contributed to this—there would be considerable advantage in employers having a little longer than just one week.

At present, the operative phrase in the Clause is "the second Monday after". This means that, if the Bill went through at the end of the week, it would be one week on the following Monday, or one week plus the weekend. This is not very long for employers to sort out the administrative details, quite apart from any other considerations. Obviously, they have Redundancy Fund accounting procedures and some staff dealing with this matter; so this should be conceded from a purely administrative point of view.

On the other hand, considering the scheme as a whole, the Under-Secretary should also remember that some firms may already have made redundancy agreements, with schemes in the pipeline and employees notified of leaving dates. They might have a month's notice or more or less and may not leave on the date of the Bill; so the employers would pay out on the old basis. This may mean a small extra cost on the Fund, and the Government might hesitate to provide it, but, on two counts—administration and the fact that some schemes may be in the pipeline—I hope that they will consider the Amendment favourably.

Mr. Hattersley

I should like to oblige the hon. Member for Rutland and Stanford (Mr. Kenneth Lewis), not least because he has referred to the kindness with which the Opposition have met the Government's belief that the Bill should go through reasonably quickly. Despite their stated objections to many of the Bill's principles, I would like to acknowledge their support for many of the objectives to make the Fund solvent.

But I cannot accept the hon. Members reasoning. He drew attention to the fact that the House—and, therefore, one hopes, the country and industry has been aware of our desire to make these provisions since 20th January. At the same time, both sides of industry, as represented by the T.U.C. and the C.B.I., were informed in advance of our intentions. It is reasonable, therefore, to date industry's knowledge from that time. Because of the processes which the Bill must still face, it is inconceivable that it will pass into law this month. So it is more than likely that from 20th January industry will have had about six weeks to make any adjustments, which are not, in any case, as great as the hon. Gentleman suggested.

They are not administrative adjustments in the normal sense of the word but calculations, which I agree will involve financial forecasting of how much companies are likely to receive from the Fund in rebate. The situation will rarely arise that the only companies which wish to make substantial alterations in their redundancy plans because of the knowledge of what we are doing are those which seek to bring forward redundancies to benefit from the higher rate of rebate rather than the lower rate which will operate after the Bill becomes law.

I am sure that we are agreed that there are few companies of that sort, perhaps none at all. If such hypothetical companies exist, I am sure that neither side of the House wants to provide for them to take that sort of advantage. What both sides want is to make the Fund solvent at the first opportunity so that the benefit of this to the economy becomes available as quickly as reasonably possible. It cannot be before March, which gives industry six weeks' notice of our operations. I hope that the committee will regard that as adequate and, therefore, not wish to accept the Amendment.

Amendment negatived.

Clause ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill reported, without Amendment.

Motion made and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.

Bill accordingly read the Third time, and passed.